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Mumbai, April 24 (Commoditiescontrol):During the week ended April 21, the July 23 cotton contract lost 278 points to close at 80.15 cents per lb, while the December 23 contract fell 242 points to finish at 80.38 cents per lb. The July 23-Dec 23 spread stood at 23 points.The price decline can be attributed to the increased chances of rain in West Texas and a disappointing export sales report.
According to the weekly export sales report released by the U.S. Department of Agriculture (USDA), net sales of 62,100 running bales (R.B.) for 2022/2023 were reported, down 57% from the previous week and 72% from the prior four-week average. This led to a drop of more than 3% in ICE cotton futures on Thursday.
Furthermore, increased rain chances in West Texas have put additional pressure on cotton prices. The area suffered from a debilitating drought last year and has only seen moderate improvement this year. However, the 6-10 and 8-14-day forecasts now have above-average rain chances for the region, up from normal to above normal recently were bearish for cotton.
The USDA's weekly crop progress report on Monday revealed that 8% of the cotton was planted in the week ending April 16, compared to 6% the week before. Additionally, managed money traders were net buyers of 7,424 contracts of cotton for the week ending April 18, reducing their net short to 7,349.
In the near term, the cotton market is expected to be supported by a combination of factors, including a shortfall in the Indian crop, short covering by managed money traders, and the possibility of increased buying of U.S. cotton by China. China has been the largest purchaser of U.S. cotton this marketing year, and the recent improvement in economic indicators has raised hopes of further purchases. As a result, technically ICE cotton July contract could move up to 95 cents/lb.
(By Commoditiescontrol Bureau: +91 9820130172)
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