Mumbai, 29 APR (Commoditiescontrol): Among several agri-commodities Cotton continues to get hammered down every month as recessionary concerns undermine supply worries. Sluggish macro environment coupled with upbeat cultivation prospect have dealt a blow to prices. The commodity experienced a roller-coaster ride during the week ended April 28th as drag and drive from fundamental factors to the strength of US dollar played out substantially. Being, the week of corporate earnings release from the Tech giants and banks in the U.S. investors focus was largely shifted to risky assets.
On Friday, ICE Cotton futures softened as dollar strength crippled month-end short-covering, putting the natural fiber on course for a third straight monthly decline. With the U.S. planting activity is expected to gather steam, and the Thursday's report on first Quarter data for the U.S. economy was disappointing, prices of cotton took a hit. Traders were anticipating Q1 growth of 2%, but the actual release was 1.1%. The slowdown could encourage the Federal Reserve to mitigate its plan to hike interest rates.
ICE Cotton contracts for May 2023 finished at 79.03 cents, up 0.40 cent, July settled at 80.80 cents, up 0.40 cent and December 2023 ended at 81.10 cents, 0.48 cent higher. Estimated volume was 28,742 contracts. For the week, Cotton futures got a bounce from the week prior, as May was up 62 points.
Spot May cotton entered its notice period Monday. There were no delivered contracts reported. May cotton's delivery period runs through its expiration on May 8. Currently, its open interest stands at 3,971 contracts.
Initially, Cotton was moderately higher Friday, supported by strong outside markets. The Dow, the Chicago Grains, the energies and the metals were all materially up. Gains in Crude oil prices also came in handy. Oil rallied nearly 2% as U.S. data showed crude output was declining while fuel demand was growing. Stronger oil prices make polyester, the man-made fiber, costly.
Thursday's US exports sales data was another factor that helped pushed cotton prices higher. The USDA report showed net sales of 194,900 running bales (RB) for 2022/2023, up 21% from the prior four-week average. Exports of 398,400 RB were up 38% from the previous week, with the primary destinations mainly being China at 104,900 RB and Vietnam at 98,000 RB, the USDA said.
Weather forecast have dampened investors sentiments. Traders are expecting a wetter forecast for West Texas. Although that region essentially remains in drought conditions, the six- to 10- and the eight- to 14-day outlooks do indicate above-normal chances of rainfall.
Monday’s Crop Progress report showed 12% of the US cotton crop planted as of April 23, now 1% above the 11% average pace.
Traders are still holding positive view on the Cotton. Friday’s weekly Commitment of Traders report tallied managed money spec funds adding another 12,949 contracts back to their cotton net short in the week ending 4/25, taking it to -20,298 contracts.
USDA’s weekly Cotton Market Review showed 6,570 bales were sold during the week that ended April 27 with an average price of 76.93 cents/lb. The April 26 Cotlook
A Index was down by 205 points to 91.70 cents/lb. The updated AWP for is 66.53 cents/lb. That compares to 70.82 cents last week.
Cotton's immediate technical trend appears bearish. Moreover, cotton's open interest, reflective of trading participants, is beginning to increase as prices fall. Such behavior is a sign that new short-sellers are wading into the market.
For Monday, support for the July Cotton contract is at 79.85 cents and 78.89 cents, with resistance at 81.71 cents and 82.61 cents.
(By Commoditiescontrol Bureau: 09820130172)
0 Comments 
Post Comment 
