Mumbai, 9 Oct (Commoditiescontrol): Cotton prices continue to flirt with the 90 cent mark, as the rally was getting sold into whenever the natural fiber made an attempt to scale above psychologically important level. Hence, the complex ended the week just gone by almost unchanged. Both pull and push forces failed to make a headway with little factors present to support their moves.
However, on Friday, ICE cotton futures settled higher, as tighter supplies and a softer dollar triggered short covering. Investors now await a federal monthly supply-demand report due later next week.
ICE Cotton contracts for December ended at 87.14 cents, up 60 cents. March closed at 88.19 cents, 60 cents higher. May settled at 88.95 cents, adding 67 cents. Last week, the December contract ended marginally lower for the week.
Cotton drove support from the weak US dollar. The greenback weakened 0.3%, making cotton more attractive to buyers overseas.
Elsewhere, Australia's exports of cotton to China ballooned to 61,319 metric tons worth $130 million in August, the most since July 2014, Australian customs data showed, as traders took advantage of normalising trade relations between the two countries.
The U.S. Department of Agriculture's (USDA) weekly sales report showed net sales of 240,000 running bales of cotton for 2023/2024, were up noticeably from the previous week.
The USDA report also showed exports of 149,600 running bales, down 6% from the previous week, primarily to China.
Census data had 1.04 million bales shipped during August. That was down 18% from last year’s start, and was slightly below the 5-yr average of 1.11m. Cotton export sales commitments for 23/24 are still just 5.78 million RB, 50% of USDA’s forecast and trailing the 62% average pace for early in the MY. Census data showed August cotton shipments at 1.04 million bales, a 17.56% decline from last year.
Meanwhile, Crop Progress report indicated 18% of the cotton crop was harvested by last Sunday, 1% above the average pace. Condition ratings were unchanged at 30% gd/ex, as the Brugler500 slipped 5 points lower to 268.
The daily classings data from USDA showed 31,078 bales were classed as upland, with no data for pima on Oct 05.
The Cotlook A Index for Oct 5 was 50 points lower to 97.05. The updated AWP for cotton was 72.36 cents/lb, up 9 points for the week. ICE Certified Stocks were shown at 39,817 bales on Oct 04.
CFTC data released on Friday showed managed money firms were closing shorts and adding cotton longs during the week that ended October 3rd. Net new buying slightly offset the short covering for an 8,833 contract stronger net long of 54,353 contracts. Commercial cotton traders added hedges during the week, increasing their total open interest by 11,900 contracts and their net short by 7,437 contracts to 227,734 and 99,348 respectively.
Much of the future trend would depend on the crop progress and economic activity amid linger Fed rate hike fears. Another element added recently added was the escalation of violence in the middle east. Israel-Hamas hostility will added pressure on financial markets, which could mean more volatility in the near term.
For Monday, support for the December Cotton contract is at 86.63 cents and 86.11 cents, with resistance at 87.58 cents and 88.01 cents.
(By Commoditiescontrol Bureau: 09820130172)
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