Mumbai, 22 Jan (Commoditiescontrol): Cotton markets have finally experienced a much needed exports boost, which helped the natural fiber to post their best week in six. Export Sales data released on Friday was the second largest this marketing year.
Apparently, ICE cotton futures settled higher, extending their recent streak of gains. The upbeat market sentiment driven by better-than-expected U.S. retail sales continues. Further, weaker U.S. dollar and fall in treasury yield helped natural fiber prices to post tripple digit rise.
ICE Cotton contracts for Mar closed at 83.95 cents, 144 points higher. May settled at 84.89 cents, adding 150 points. Jul ended 136 point strong at 85.32 cents.
The front month cotton futures finished 0.5% to 3.25% higher on the last trade day of the week. The old crop futures again led the way, leaving the March contract at a net 264 point gain for the week and a 373 point premium to Dec.
FAS Export Sales data had 420,000 RBs of cotton sold during the week that ended Jan 11. That was a 60% increase from the week prior led by sales to China. Cotton commitments were 9.06m RBs, compared to 8.86m at the same time last year.
In recent times, the export data stayed strong above 200,000 bales in the last four reports, hovering close to the marketing-year record of 231,000 bales hit in the week of Dec. 21.
Cotton export sales commitments for 23/24 are now 9.306 million RB, which is 82% of USDA’s current cotton export forecast matching the 81% average pace for this point in the MY. Shipments thus far in the marketing year are ahead of pace at 33% of the USDA forecast vs. the 32% average.
The U.S. economic data was considered fairly positive. U.S. retail sales increased more than expected in December, data showed. Clothing store sales jumped 1.5%.
The dollar retreated lower from one-month high, making U.S. cotton less expensive for overseas buyers.
Meanwhile, the monthly Crop Production update showed cotton production 350,000 bales smaller than last month at 12.43 million bales.
That 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 updated 7-day QPF from NOAA has heavy accumulations for the Texas/Los Angeles Gulf, with as much as 7” expected over the coming week. South Central Texas to Northern Georgia will see at least 1” over the coming week. The updated Drought Monitor still had Southern Texas and most of Los Angeles/Mississippi in D3-D4 drought.
The Cotton Growers Acreage Survey for 2024 shows intentions for 10.19 million acres vs. USDA’s 2023 figure of 10.23 million.
Elsewhere, reports from Mato Grosso show second cotton planting is underway. Some farmers have reportedly abandoned the soybeans to begin cotton planting.
The Seam confirmed 22,023 bales were sold for an average gross price of 78.54 cents/lb. ICE certified stocks were 1,949 bales as of Jan 17. The Cotlook A Index remained at 91.65 cents/lb. The Adjusted World Price for cotton is 65.47 cents/lb via the FSA’s update. That is up 51 points vs the previous week.
USDA’s weekly Cotton Market Review had 42,224 bales sold during the week with prices averaging 76.75 cents.
Friday’s Commitment of Traders report showed spec funds cutting 4,856 contracts from their new net short position now at 2,016 contracts in cotton as of the week ending on January 16.
Cotton prices have managed to break the shackles of poor demand and analysts expectations. There was skepticism about the U.S. cotton prices gaining traction this year as impact of lesser output was neutralised by China buying cotton from Brazil and Australia. However, the small drop in production and the rise in US export have come in as a surprise. This change has forced traders to alter their outlook as well with many traders scrambling to cur their short position. Against that backdrop one can expect prices to maintain its recovery moment. Further gains cannot be ruled out. However, we are once again hitting a stiff resistance levels on chart, which should help keep a tight leash on prices.
For Monday, support for the March Cotton contract is at 82.60 cents and 81.25 cents, with resistance at 85.01 cents and 86.07 cents.
(By Commoditiescontrol Bureau: 09820130172)
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