Mumbai, 11 Jun (Commoditiescontrol): It was a busy schedule for the Cotton complex during the week ended Jun 9th. The front month contract entering the expiry period, besides couple of key data points from the USDA that included weekly exports, crop condition and WASDE report providing global demand/supply situation. Collectively, these data points led to an increased price volatility which to a some extent was also driven by the US dollar movement.
ICE cotton futures settled mixed on Friday, as the June WASDE proved to be neutral, or at least, not overly bearish. In addition, traders were encouraged by the fact the S&P 500 posted fresh highs for the year.
Traders were also busy rolling over their positions from the front-month contract, while weaker dollar and a strong weekly export sales report helped keep floor under prices.
ICE Cotton contracts for July 2023 finished at 84.04 cents, down .27, and December 2023 ended at 81.82, .19 higher. Today's estimated volume was 56,182 contracts. July contract expired with Friday's settlement. It will soon enter delivery on June 26. July was down 201 points or 2.34% for the week, while new crop December slipped just 3 points.
As mentioned earlier, the U.S. Department of Agriculture (USDA) early week crop progress report weighed on traders/investor psyche. Crop Progress report showed 71% of the US cotton crop planted as of 6/4, now 4% behind the 75% average pace. The crop was also seen at 6% squared, 4% behind normal. NASS indicated an improvement in crop condition rating by 3% to 51% gd/ex, or 346 on the Brugler500 index, a 5 point move on the week.
The agency has raised the old crop cotton export by 400,000 bales to 13 million flat. With a 100,000 decrease to domestic use, cotton stocks were cut by 300,000 to 3.2 million. That reduced new crop’s carrying, but production was raised by more than enough to offset. USDA added acres back to harvest (cut abandonment by 700,000), but reduced yield by 13 lbs/acre to 841. Production is now forecast at 16.5 million bales. As for new crop usage, exports were lifted by 500,000 bales to for a net 200,000 bale increase to 3.5 million. Global exports were upped by 900,000 as China is now projected to bring in 500,000 bales more than in May.
The 2023/24 U.S. cotton projections compared to last month show lower beginning stocks, but higher production, exports, and ending stocks. Projected abandonment in the Southwest has been reduced due to recent favorable rainfall, resulting in a production increase of 1.0 million bales to 16.5 million.
On Thursday, the USDA weekly export sales report showed net sales of 480,400 running bales (RB) for 2022/2023 — a marketing-year high — up 79% from the previous week and noticeably from the prior four-week average. Monthly export data from Census showed 1.55 million bales shipped during April.
New crop sales came in at 30,816 RBs. The week’s exports were shown as 316,953 RBs. That left the season’s total at 9.781 million through Jun 1. Census reported 1.551m bales of cotton was exported in April. The season’s official total export was pegged at 9.4m bales.
A U.S. government forecaster confirmed that El Nino conditions are present, with farmers from Australia to India bracing for the possible hit to crops from the dry, hot conditions it could bring.
However, "El Nino is traditionally associated with wetter conditions in the U.S, especially in Texas, so it is looking good on the U.S. side for the larger crop". Texas is a top cotton-growing state.
Elsewhere, the Indian government raised the cotton purchase price by nearly 9% to 6,620 rupees per 100 kg, the highest increase in five years.
The Jun 8 Cotlook A Index was 94.85 cents which was down by 40 points. The new AWP for cotton was 247 points higher to 69.38 cents. ICE Certified stocks were 15,579 bales as of Jun 7.
The weekly Commitment of Traders report showed managed money cotton traders at a 4,070 contract net long for Jun 6. That was a 2,560 contract stronger net long mostly via short covering. The commercial cotton hedgers extended their net short by 10,300 contracts through the week to 59,632.
Next week begins with USDA’s Export Inspections and Crop Progress reports on Monday per normal. Tuesday is the release of CPI data, with PPI out on Wednesday and a FOMC meeting/rate decision rounding things out in the afternoon.
Analysts expect volatility to increase over the near term, with overall risk to the upside expected to be less than that to the downside with the trading range expected to be nearly symmetrically distributed to positively skewed
For Monday, support for the July Cotton contract is at 81.39 cents and 80.96 cents, with resistance at 82.21 cents and 82.60 cents.
(By Commoditiescontrol Bureau: 09820130172)
0 Comments 
Post Comment 
