Mumbai, 30 Oct (Commoditiescontrol): Cotton came back from last week’s weakness, benefiting from the upbeat demand prospect although the Crop Progress report overhang presented cause for concern.
ICE cotton futures settled mixed on Friday, as strong U.S. export sales report rebuffed pressure from a firmer dollar. The green-back was higher on the week, making cotton more expensive for overseas buyers. Oil prices rose 1%, making polyester, a substitute for cotton, more expensive.
ICE Cotton contracts for December ended at 84.38 cents, down 21 cents. March closed at 86.13 cents, 1 cents higher. May settled at 86.98 cents, adding 8 cents. Cotton was up 2.4% so far this week, their biggest weekly increase since Sept. 1 after hitting a three-month low last Friday. The contracts were kept within 80-90 cents since mid-July.
The complex benefited from the strong U.S. cotton exports data. On Thursday, the USDA's weekly export sales report showed net sales of 186,100 running bales for the marketing year 2023/2024. That was a 160% increase for the week and was nearly triple the same week last year.
The net sales were up noticeably from the previous week and 82% higher than the prior four-week average. The increases were primarily led by China and Bangladesh. Other markets or buyers were pretty active when the market was coming down.
Cotton exports, however, were only 98,000 RBs for the week, a 43-wk low. The MYTD total trails last season by 30% with 1.8m RBs shipped.
The weekly Cotton Market Review from USDA showed 4,958 bales were sold at spot through the week at an average price of 78.3 cents/lb. USDA also reported 713,276 bales were classed during the week for a season total of 2.583m bales. Last year’s classings had 3.13 million bales at this point.
The USDA in a weekly crop progress report on Monday said 29% of the cotton crop was in good to excellent condition, compared with 30% last week. West Texas will see more precipitation over the near-term, while harvest conditions across the balance of The Belt remain mostly favorable.
Weekly Crop Progress data from NASS showed 90% of cotton bolls were open as of Oct 22, and harvest was 41% finished at the national level. Cotton conditions converted to a 267 on the Brugler500 Index, a 2 point drop through the week. Alabama fell by 14 points, while Texas depreciated by 4 points.
The Cotlook A Index was back up by 75 points to 94.35 cents/lb. The updated AWP for cotton was 110 points lower for the week to 68.72 cents/lb. The ICE certified stocks for Oct 25 was 70,706 bales.
CFTC reported the managed money funds were closing longs during the week that ended Oct 24. That reduced their net long by 5,600 contracts to 27,724. Commercial cotton hedgers closed 16,000 short hedges for a 61,484 contract net short.
Analysts and traders have highlighted that U.S. cotton prices are unlikely to gain much traction this year despite lesser output as trade tensions have been pushing key buyer China to other cotton producers like Brazil and Australia.
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.
As reported in the previous week, the cotton complex continue to trend higher amid boutes of profit taking in between. Crop progress report has emerged one key element alongside economic activity to set the tone for price action. 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 83.66 cents and 82.94 cents, with resistance at 85.27 cents and 86.16 cents.
(By Commoditiescontrol Bureau: 09820130172)
0 Comments 
Post Comment 
