Mumbai, 15 Jan (Commoditiescontrol): Cotton managed to recoup some losses from the previous week while closing the week ended Jan 12th higher benefiting from smaller drop in crop production and increased in the U.S. export sales. the technical buying spurred by short covering, after the price dropped to near one-month low, has alos lent support.
However, the ICE cotton futures ended Friday's session largely unchanged, as traders braced for the U.S. Department of Agriculture's (USDA) monthly supply and demand report which is expected to provide little impetus. The trend so far remain sluggish as the global economy is grappling with weak demand for cotton amid supply abandunce.
ICE Cotton contracts for Mar closed at 81.31 cents, 5 points lower. May settled at 82.29 cents, losing 4 points. Jul ended unchanged at 82.94 cents.
March prices were rallying into the USDA reports, but fell back to the red after seeing the data. March futures were still 112 points or 1.4% higher for the week.
The market will be closed on Monday to observe Martin Luther King jr Day.
Meanwhile, the USDA lowered the cash average price for cotton by a penny to 76 cents/lb.
The monthly Crop Production update put cotton production 350,000 bales smaller than last month at 12.43 million bales. That tighter production also had WAOB trimming exports by 100,000 bales to 12.1 million, with the projected 23/24 carryout at 2.9 million bales, down 200,000. The world ending stocks were up 1.98 million bales to 84.38 million as they raised Chinese production and dropped consumption out of India, Indonesia, and Pakistan most notably.
The Cotton Growers Acreage Survey for 2024 shows intentions for 10.19 million acres vs. USDA’s 2023 figure of 10.23 million.
USDA Thursday’s Export Sales data showed a nice bounce from the previous week to 262,478 RB for upland cotton sales in the week that ended on January 4th. China came back in for some more. Shipments also recovered to 228,062 RB. Cotton export sales commitments for 23/24 are now 8.886 million RB, which is 77% of USDA’s current cotton export forecast. That trails the 81% average pace for this point in the MY.
The monthly cotton shipments were shown at 557,636 bales for November. That compared to 390,000 bales in October and 756,000 during Nov ’22. The season’s total shipment reached 2.64 million bales via the Census data. That compares to 3.3m last year and is 21.6% of the WASDE full year forecast through the first 5 months.
Elsewhere, reports from Mato Grosso show second cotton planting is underway. Some farmers have reportedly abandoned the soybeans to begin cotton planting.
USDA’s weekly Cotton Market Review had 42,224 bales sold during the week with prices averaging 76.75 cents.
The Seam reported 22,424 bales were sold online on Jan 11 for an average gross price of 75.71 cents/lb. The Cotlook A Index was 25 points stronger on Jan 9 to 90.65 cents/lb. The AWP was up by another 80 points to 64.96 cents/lb., effective through next Thursday.
Weekly data from CFTC showed the funds were adding new shorts in their cotton position during the week that ended Jan 9. That extended the group’s net short by 2,500 to 6,900 contracts. Commercial cotton traders added 4,600 new contracts during the week, but on net only reduced their net short by 144 to 40,585.
As mentioned in our previous reports, the analysts and traders have highlighted the fact that the 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. However, the small drop in production and the modest rise in US export have come in as a surprise. But that hardly caused any difference to traders outlook.
The latest COT report has shown that the speculators have added to their short position whereas commercial traders have cut their net short position marginally. Analysts continue to maintain cautious outlook. Lack of clear participation from the Chinese traders and the crisis in the middle-east are key for cotton to stage reversal.
For Tuesday, support for the March Cotton contract is at 80.84 cents and 80.37 cents, with resistance at 82.00 cents and 82.69 cents.
(By Commoditiescontrol Bureau: 09820130172)
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