Mumbai, 6 Nov (Commoditiescontrol): Weak demand prospect dominated cotton trade in the recent past and is back in action during the just concluded week. After witnessing sideways move the complex caved-in to selling pressure as traders raised bearish bet. The focus on economic activity took to centerstage, in a move to assess future course of action.
On Friday, ICE cotton futures ended lower, returning to losing streak observed earlier, as speculators queued up to take advantage of weak outlook. However, the dollar's retreat helped limit the losses. On Thursday, the natural fiber benefited from the federal report that flagged a marketing-year high in U.S. export sales led by top buyer China.
Recently, cotton prices got a boost from the dollar index easing 1% that makes cotton less expensive for overseas buyers. China's return to market is also another big positive.
ICE Cotton contracts for December ended at 79.62 cents, down 18 cents. March closed at 82.12 cents, 12 cents lower. May settled at 83.18 cents, losing 16 cents.
Bearish factors, including persistent concerns over demand for the natural fiber, led cotton 5% lower for the week. This is despite an uptick on Thursday driven by healthy weekly export sales numbers.
The U.S. Department of Agriculture's (USDA) weekly export sales report showed net sales of 457,100 running bales in the week ended Oct. 26, their highest level for the marketing year 2023/2024. Around 70% of the sales were driven by China, and the report also showed overall exports were up 35% from the previous week at 132,200 running bales. Compared to history, demand this year is very average. But the latest report was a surprise, thanks to China.
USDA reported 809,452 bales of upland cotton was classed this week and 9,770 bales of pima. That had the all cotton season total at 3.407m bales, compares to 4.123m bales last year. The final condition rating score was unch at 29% gd/ex, as the Brugler500 was back up another 2 points to 269.
The weekly Cotton Market Review from USDA showed 10,167 bales were sold at spot during the week for an average price of 76.73 cents/lb. The Cotlook A Index for Friday was 130 points weaker to 91.3 cents/lb. USDA’s FSA reduced the AWP for cotton by 61 points to 68.11 cents/lb.
Meanwhile, Cotton Association of India (CAI) released a report on Tuesday that suggests the country would produce less cotton in 2023/24. The trade body expects 7.5% fall in output to 29.5 million bales on lower planted area and as El Nino weather hit productivity. It expects India's cotton imports growing to 2.2 million bales in the marketing year that started on Oct. 1, up from the last year's 1.25 million bales.
The December cotton has kind out of run out of time. Speculators are cutting their long positions based on the trading behavior, traders said.
In the week to Oct. 24, speculators more than halved their net long position in ICE cotton futures, data from the Commodity Futures Trading Commission (CFTC) showed. The managed money spec traders were 2,667 contracts less net long to 25,057. Commercial cotton traders closed 10,800 hedges during the week that ended Oct 31, that lightened up their net short by 3,199 contracts to 58,285.
Analysts and traders have highlighted that U.S. cotton prices are unlikely to gain much traction this year despite lesser output as trade tensions have been pushing key buyer China to other cotton producers like Brazil and Australia.
Traders also took stock of mixed bag of economic data released on Friday by China showing slump in exports and imports. Lingering deflationary pressures underlined the challenges policymakers face in trying to engineer a stronger economic recovery.As reported in the previous few weekly reports, the cotton complex continue to trend higher amid bouts of profit taking in between. Crop progress report has emerged one key element alongside economic activity to set the tone for price action. Also, Fed rate hike fears and economic data release dominated the proceedings. However, some of the data proved little supportive for rate hike and hence Federal Reserve may take a pause and might even consider reversing its action.
For Monday, support for the December Cotton contract is at 79.05 cents and 78.47 cents, with resistance at 80.35 cents and 81.07 cents.
(By Commoditiescontrol Bureau: 09820130172)
0 Comments 
Post Comment 
