Mumbai, 23 Oct (Commoditiescontrol): Cotton continue to consolidate as concerns over global demand and wobbly financial market condition due to ongoing Israel-Hamas conflict chased investor to safe-haven assets.
ICE cotton futures ended sharply lower on Friday, tracking sell-off in global financial markets which triggered risk-off sentiment while weak demand from key buyer China continues to dim outlook. The natural fiber posted back-to-back two weeks of loss.
ICE Cotton contracts for December ended at 82.4 cents, down 187 cents. March closed at 84.53 cents, 165 cents lower. May settled at 85.68 cents, losing 160 cents. The cotton market settled the Friday session with another triple digit loss. Dec was nearly a penny off the daily low, but was still 2.2% weaker for the day and 4.3% lower for the week. The contracts were kept within 80-90 cents since mid-July.
Dow Jones, Nasdaq dropped as U.S. Treasury yields hovered near multi-year highs following hawkish remarks by Federal Reserve Chair Jerome Powell, while the Middle East conflict kept investors jittery.
Traders also took stock of mixed bag of economic data released on Friday by China showing slump in exports and imports. Lingering deflationary pressures underlined the challenges policymakers face in trying to engineer a stronger economic recovery.
Thursday's U.S. Department of Agriculture's weekly sales report showed net sales of 71,300 running bales of cotton for 2023/2024 were up 64% from the previous week but down 36% from the prior four-week average. Further, the exports were down 22% from the prior 4-week average.
Guatemala and China were the top buyers for the week, each over 20,000 RBs. The week’s export was 110,000 RBs for a season total 1.716 million. That trails last year’s 2.37m export pace.
Interestingly, Brazil is on track for record cotton shipments in the 2023/24 commercial year, an exporter group said last month, citing a large crop and likely record sales in September.
USDA’s weekly classings report showed 505,000 bales were classed for the week for a season total of 1.87 million. That compares to 2.3m bales at this time last year.
The week’s Cotton Market Review had 7,676 bales sold for an average price of 79.65 cents/lb. The season’s total sales was marked at 108.700 bales, from 33,00 last year.
The Cotlook A Index was steady at 95.25 cents/lb on Oct 13. The updated AWP for cotton is 124 points lower at 69.82 cents. Certified stocks were shown at 58,785 bales for Oct 19.
Earlier in the week, the NASS showed 87% of cotton bolls were open, 1ppts behind the average pace. Harvest had advanced 8% points for the week to 33% complete. The average pace would be 32% finished. Conditions fell 6 points to 269 on the Brugler500 Index. Arkansas, Arizona, and Alabam as well as South Carolina were improved for the week, though Mississippi, Tennessee, Texas, and Virginia were weaker for the week.
Meanwhile analysts said, U.S. cotton prices are unlikely to gain much traction this year despite lesser output as trade tensions push key buyer China to rivals Brazil and Australia.
CFTC data showed managed money cotton traders closed 11,000 longs and added 3,300 new shorts during the week that ended Oct 17. That reduced the spec fund group’s net long to 33,343 contracts. Commercials also closed 11,000 shorts and added 5,700 new long hedges for the week, leaving the group at a 76,541 contract net short.
Cotton complex entered consolidation phase last week and the trend is still in tact. Having said that, the future movement will be decided by the crop progress and economic activity. Also, linger Fed rate hike fears and economic data release would dominate the proceedings. The escalation of violence in the middle east will continue to determine the mood in risky assets. 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 81.23 cents and 80.06 cents, with resistance at 83.85 cents and 85.30 cents.
(By Commoditiescontrol Bureau: 09820130172)
0 Comments 
Post Comment 
