Mumbai, 18 Jun (Commoditiescontrol): For cotton, the week ended to June 17th provided little reason to cheer. The event heavy week that saw FOMC pausing rate hike and the discouraging trend of U.S. exports sales. Ahead of key events the traders participation remains largely muted, affecting the prices.
However, ICE cotton futures posted moderate gains on Friday, snapping seven consecutive days of decline for July contract. The commodity drew support from gains in wider equities and grain markets. Cotton complex benefited from the risk-on sentiment in broader markets, traders said. ICE Cotton contracts for July 2023 settled at 81.46 cents, up 0.82 cent and December 2023 ended at 80.10 cents, 0.50 cent higher. Estimated volume was 29,209 contracts. The July contract will enter delivery on June 26 and expire on July 7.
The July contract was still at a 258 point loss for the week. December was down by 172 points for the week’s net move. Easing supply pressure led to the decline in natural fiber prices for the week.
Cotton complex experienced moderation in volume this week as traders are busy assessing many direct and indirect fundamentals such as poor exports, wild weather, a rising Dow Jones, and a two-sided U.S. dollar. Crude oil was steady to higher Friday as the general demand outlook tightened by increased Chinese usage, as well as recent supply cuts by OPEC. China's refinery demand was higher during May to its second-highest total on record.
On the weather front, the six- to 10-day forecast calls for above-normal temperatures for Texas. However, the El Nino weather pattern could bring even more rain to Texas, as well as the Delta and Southeast.
The U.S. Department of Agriculture (USDA) in a weekly crop progress report on Monday showed 81% of U.S. cotton was planted in the week ended June 11 compared to 71% a week ago. The report also highlighted that 49% of cotton was in good-excellent condition versus 51% a week ago.
National cotton planting progressed by 10% points through the week ending Jun 11 to 81% planted. The average pace is 86%. NASS showed 11% was squaring, which is 3 ppts behind the average pace. NASS showed cotton conditions worsened nationally through the week, with the Brugler500 Index down 5 points to 341.
On the exports front, the data provided a mixed view. The U.S. Department of Agriculture's (USDA) weekly export sales report on Thursday showed net sales of 98,900 running bales (RB) for 2022/202, down 79% from the previous week and 61% from the prior four-week average. The agency also highlighted exports of 244,800 RB were down 23% from the previous week and 19% from the prior four-week average. Total commitments were 13.61 million RBs through Jun 8. USD also reported 66,000 RBs sold for 23/24 delivery, leaving the total at 1.78m.
The U.S. export sales were dismal while exports were decent. Nearly all old crop sales were attributable to China. Cancellations were negligible, traders said.
Elsewhere, Brazil's 2022/23 cotton (lint) output was seen at 2.9 million tonnes versus 2.5 million tonnes last season, according to the country's food supply and statistics agency Conab.
The CFTC reported long liquidation from the cotton spec traders during the week that ended Jun 13. That reduced their net long by 3,500 contracts through the week to 557. The commercial traders closed positions on both sides, but only moved their net short by 1,800 contracts to 61,000.
USDA’s weekly Cotton Market Review showed 3,088 bales were sold this week for an average price of 78.07 cents. The Cotlook A Index was down by 95 points to 91.8 cents for Jun 15. The AWP for cotton was revised 238 points lower to 67 cents flat. ICE Certified stocks for Jun 13 were 17,918 bales.
Monday is a federal holiday, thus all banks and markets are closed. Cotton trading reopens Monday night. Export Sales data will be out on Friday morning with the delay.
Cotton prices staged a rebound on a couple of occasions after sliding below the 80 cents mark this week. This trend is likely to continue in near terms given the persistent global weather uncertainty. Opening a fresh bearish trade will be a risky proposition. Traders have been cutting positions on either side, the long and short.
For Tuesday, support for the July Cotton contract is at 79.44 cents and 78.78 cents, with resistance at 80.80 cents and 81.50 cents.
(By Commoditiescontrol Bureau: 09820130172)
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