Mumbai, 4 Dec (Commoditiescontrol): cotton priced has stayed lower for the second straight week ended Dec 1st as peak-up in harvesting activity, low demand and the fluctuation in US dollar continue to add pressure. Further, the end of truce between Israel-Hamas is feared to impact trader sentiment, prompting risk-off activity. On Friday, ICE cotton futures ended lower as recently rally faded into weekend profit-taking trade. However, near month cotton futures got a little bit of strength in the old crop contracts.
ICE Cotton contracts for Dec ended at 78.42, down 98 cents. Mar closed at 79.42 cents, 64 cents lower. May settled at 80.12 cents, losing 58 cents. New crop Dec was 25 points higher at the close. For the week, the Dec contract slipped 1.94%, extending its recent spate of lower closing. The March contract was 52 points lower since last Friday. As a result, the natural fiber recorded their fourth consecutive monthly loss as overall demand remained lackluster.
However, some short covering in November, did try to support prices, but cotton hasn't been a bull market since demand is not firm, traders said.
In recent times, cotton complex struggled to navigate lingering demand concerns and a good harvest season. These elements continue to weigh on the natural fiber market.
Pick up in the pace of harvest (currently 6% above normal), lack of many harvest disruptions, and a clear weather outlook have put some increased harvest pressure on the market, traders said.
Thanks to softer dollar, down 0.5% for the day, the natural fiber continue to gain momentum. The dollar index fell to its lowest in about 2-1/2 months. crude oil prices strengthened on supply worries while investors await a meeting outcome of OPEC+ this Sunday when the producer group may discuss deepening supply cuts.
Weak dollar and firm oil markets are influencing natural fiber price movement. Softer green-back makes cotton cheap for overseas buyers; while weak crude oil price makes polyester, a cotton substitute, less expensive. Last week, cotton prices fell to six month low on weak China demand outlook.
Meanwhile, the U.S. Department of Agriculture's (USDA) weekly export sales report showed net sales of 217,700 RB for 2023/2024 were down 32% from the previous week and 42% from the prior 4-week average. The USDA report also highlighted exports of 88,800 RB were up 14% from the previous week, but down 14% from the prior 4-week average. The destinations were primarily to China.
Exports were not robust, but weren't terrible. Cotton export sales commitments for 23/24 are now 7.584 million RB after the last few weeks of solid sales, which is 66% of USDA’s forecast and trailing the 70% average pace for this point in the MY.
China's been buying a lot of cotton from the U.S. over the last month as Australia faces bad weather but in the new year they may come back and cancel some of those, traders added.
The last NASS Crop Progress report for this year showed 83% of the US cotton harvest finished by 11/26, running 4% percentage points ahead of the average pace.
Cotton's planted area in Brazil was estimated to rise 14.9% year-on-year to 1.94 million hectares, while output was forecast to jump 16.4% to an all-time high of 3.74 million tons, agribusiness consultancy Agroconsult said on Wednesday.
The Cotlook A Index for Nov 29 was 25 points stronger to 89.70 cents. The AWP was 105 points stronger to 64.18 cents/lb. ICE certified stocks stand at 87,769 bales.
Managed money firms were adding shorts in cotton during the week that ended Nov 14, according to the Commitment of Traders data. That flipped the group from an 8,700 net long to a 5,899 contract net short. Commercial traders were closing hedges in near equal order. With 35,000 fewer hedges in place, the net short was 504 contracts weaker to 45,517.
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.
This has helped us to maintained in our view in the previous report. China returning to market is driving optimism. The largest buyer of U.S. cotton has decided to stop auctioning cotton from state reserves as well, as per local report, which favours markets for now. These moves should keep markets fairly supported at lower level. Much would depend on the on-going hostility between Israel-Hamas. A wider escalation would turn a big negative for natural fiber.
For Monday, support for the March Cotton contract is at 79.07 cents and 78.73 cents, with resistance at 79.95 cents and 80.49 cents.
(By Commoditiescontrol Bureau: 09820130172)
0 Comments 
Post Comment 
