Mumbai, 13 Nov (Commoditiescontrol): Cotton complex extended its steak of losses during the week ended Nov 10, as weak global demand undermined the recent in rebound U.S. exports sales. Further, the slide in crude oil prices and hawkish comments of Federal Reserve Chairman Jerome Powell deterred long traders from venturing into the markets.
Yet, on Friday, ICE cotton futures ended higher benefiting from investors preparing to roll over their positions from the front-month contract. However, the combination of bearish WASDE report and demand concern contributed to a weekly decline in prices. Broader weakness of grain markets also dampened investor sentiment.
Earlier this week, cotton prices fell to six month low on weak China demand outlook. Also, softer dollar and rise in crude oil prices extended support. Weak green-back makes cotton affordable for overseas buyers; while firm of crude oil makes polyester, a cotton substitute, more expensive.
ICE Cotton contracts for December ended at 77.32 cents, up 80 cents. March closed at 79.5 cents, 29 cents higher. May settled at 80.28 cents, adding 15 cents. For the week, Dec contract lost 230 cents or 2.9%. It second straight week of losses. Meanwhile, December cotton options expired on Friday.
Weekly Commitment of Traders data is delayed until Monday given the Veteran’s Day government holiday.
NOAA’s 7-day QPF has heavy rainfall totals for the Gulf coast, with as much as 4” accumulated in the forecast for Southern Los Angles, Mississeeppi, and Alabama.
The USDA's weekly export sales report showed net sales of 395,200 running bales (RB) of cotton for 2023/2024, down 14% from the previous week, but up noticeably from the prior four-week average.
USDA raised the national average cotton yield by 16 lbs/acre to 783. That lifted production by 270,000 bales to 13.09 million. Domestic use was also cut by 100,000 bales, lifting stocks by 400,000 from October to 3.2 million. Global numbers saw an 860,000 bale increase to 113.5 million. Carryout was 1.58 million bales looser at 81.5 million. The weekly Crop Progress report showed 57% of the cotton crop harvested by last Sunday, 2% above the average pace.
USDA’s monthly Cotton Ginnings report showed 3.656m bales were ginned as of Nov 1. That is down 14% from last year’s pace, but compares to 3.543m during 21/22.
USDA’s FAS reported 395,170 RBs of cotton was sold for export during the week that ended Nov 2. That was down from the MY high last week but was up from 146,000 RBs during the same week last year.
The Weekly Cotton Market Review showed 6,165 bales were sold at spot this week, averaging 72.25 cents/lb. The Cotlook A Index was 165 points lower on Nov 9 to 87.55 cents/lb. The new AWP for cotton is 64.62 cents/lb, down by 3.49 cents from last week. ICE Certified Stocks were 83,652 bales on Nov 8.
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.
We have been witnessing increased selling pressure led by bearish WASDE report and USDA Crop progress report. The trend is likely to sustain as negative flows are expected to continue.
For Monday, support for the March Cotton contract is at 78.29 cents and 77.08 cents, with resistance at 80.44 cents and 81.38 cents.
(By Commoditiescontrol Bureau: 09820130172)
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