Mumbai, 3 Sep (Commoditiescontrol): Cotton futures are on roll, benefiting from the combination of unfavourable/dry weather conditions in the growing region while China announcing measures to support real-estate sector mired in debt trap as well as helping other key sectors to gain momentum bolstered trader sentiment.
The optimism around China's economic recovery helped natural fiber to post its best weekly gains in 11 months. It was a complete turnaround in the sector outlook, which not too far ago, two-weeks ago, had posted its worst losses in five months.
What caused change to the outlook....as mentioned earlier the China played a crucial rule while weather concerns provided crucial support.
Apparently, on Friday, ICE cotton futures settled higher. ICE Cotton contracts for December ended at 89.95 cents, up 213 cents. March closed at 89.77 cents, 204 cents higher. May settled at 89.70 cents, adding 202 cents.
Dec finished the week with a net 264 point gain. Through the month of August, Dec futures saw a 558 point range and a net 310 point gain. The contract posted their third straight monthly gain.
Crop Progress data from Monday indicated 90% of the cotton crop setting bolls, with 25% of the crop with bolls open, both even with the average. Condition ratings were unchanged at 33% gd/ex, as the Brugler500 was left alone at 271.
USDA’s weekly Classings summary showed 109,700 bales were classed in Texas this week for a season total of 389,900 bales. No other states have begun reporting. Meanwhile, Hurricane Idalia made landfall in Florida as an "extremely dangerous" Category 3 storm. Most of Florida's 21 million residents - and many in the adjacent states of Georgia and South Carolina - were under hurricane warnings and other storm-related advisories.
Thursday’s Export Sales report tallied 23/24 bookings picking up the pace slightly in the week of Aug 24 to 61,400 RB, as China bowed out this week. Shipments during that week of August 24 improved to 214,100 RB. Cotton export sales commitments for 23/24 are 5.227 million RB, 44% of USDA’s forecast and trailing the 55% average pace for early in the MY.
USDA’s weekly Cotton Market Review showed 27,109 bales were sold for the week at an average price of 82.52 cents. The Cotlook A Index was up by a penny to 97.95 on Aug 31. The updated AWP for cotton was 71.56 cents, up by 2.5 c/lb. ICE Certified Stocks were 352 bales.
Positive cues have also emerged from traders participation on the futures contract, which suggest a tilt towards bullish move in the coming days.
The weekly CFTC Commitment of Traders data, on Friday, showed spec traders in cotton futures and options adding back another 11,185 contracts to their net long during the week that ended on August 29. That took the position to 38,403 contracts as of Tuesday – their strongest position since September 2022. Commercial cotton traders added 7,500 new short hedges during the week, taking their net short to 88,934 contracts.
Cotton is up on "continued poor weather for Texas and decent demand; it's not robust, but it's not poor either, traders said. China is having problems but they continue to buy the U.S. cotton along with other sources. That will remain key for cotton prices going forward. Speculators building long positions on demand expectation will continue to roll cotton prices higher, there is some resistance in between though. For now, the 90 cents mark remains a major hurdle.
For Monday, support for the December Cotton contract is at 88.33 cents and 86.72 cents, with resistance at 90.78 cents and 91.62 cents.
(By Commoditiescontrol Bureau: 09820130172)
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