Mumbai, 26 Feb (Commoditiescontrol): During the week ended Feb 23rd, cotton prices continued to maintain winning streak helped by softer dollar and export sales data from the U.S. However, the prospect of prolonged lofty interest rates are coming in to play, lately, to check this exuberance. That's likely to impact consumer demand growing forward.
On Friday, ICE cotton futures ended mixed as global demand concerns undermined the influence of softer dollar. Fall in oil prices also weighed on cotton's prices. Lower oil prices make polyester, a cotton substitute, less expensive.
The complex endured profit taking as well in forward contract as the recent streak of gains, cotton prices posted sixth-straight week of gain, as analysts and traders remain optimistic about the natural fibre market maintaining upward momentum led by speculative buying.
The monthly World Agricultural Supply and Demand Estimate (WASDE) update showed a 150,000 bale lighter U.S. domestic cotton use, now at 1.75 million bales. Exports, however, were raised by 200,000 bales to offset. On net ending stocks tightened by 100,000 to 2.8 million in the report.
ICE Cotton contracts for Mar closed at 95.42 cents, 122 points higher. May settled at 93.37 cents, losing 109 points. Jul ended 112 point weak at 92.50 cents.
The front month cotton futures were 10 to 100 points weaker in the active contracts on Friday. March futures printed a 73 point gain, though OI was listed at just 409 contracts. The March ’25 contract was also a point higher at the bell. It advanced 1.12% during the week. Dec prices ended the week with a net 69 point loss Friday to Friday.
For most part of the week, Cotton benefited from technical buying activity, people rethinking NCC acres numbers a little bit and the dollar not gaining anymore, dealers said.
An NCC acreage intentions survey released at the 2024 National Cotton Council Annual Meeting showed only 9.8 million acres of intentions to the US in 2024. Upland cotton was estimated at 9.6 million and 200,000 acres of ELS types. The farmer surveys were completed in mid-January and may not reflect sentiment after the stout rally in December futures during February. Plantings in major producer Texas were seen down 5.2%. On February 14, the USDA OCE put out a much different assessment at 11 million acres.
Meanwhile, the USDA’s Ag Outlook Forum showed cotton acreage estimated at 11 million acres this for this spring. That is a 7.5% increase vs. a year ago. Analysts surveyed ahead of the report expected a modest 300-400,000 acre increase vs. 2023.
The USDA’s weekly cotton export sales were 130,500 RBs for the week that ended 2/15. That was down from 160,000 RBs last week as a 9-wk low for new business. Shipments were 255,500 RBs taking the season’s total export to 5.07m RBs, and the season’s total commitments to 10.4m RBs. USDA also mentioned 255,000 RBs sold for new crop.
USDA’s weekly Cotton Market review showed 12,251 bales were sold this week averaging 88.33 cents/lb. The Cotlook A Index was 230 points weaker to 99.30 cents/lb. The AWP was 168 points stronger at 75.12 cents. ICE certified stocks were 997 bales as of Feb 21.
Elsewhere, India offered guaranteed support prices for pulses, corn and cotton in a bid to break a deadlock with protesting farmers.
India's cotton exports in February are set to jump to the highest level in two years, as a rally in global prices has made Indian cotton attractive for Asian buyers who earlier sourced the fibre from Brazil and the United States, traders said.
CFTC reported cotton spec traders were adding new longs through the week that ended Feb 20. That left the group 14,500 contracts more net long at 86,100 contracts. The commercial cotton hedgers added 7,000 new shorts through the week which expanded their net short by 129,300 contracts.
Cotton complex has returned to focus on fundamental factors, particularly demand, after being influence by key technical indicators such as traders covering shorts after price droping to near one-month low and March contract nearing its expiry. The skepticism about the U.S. cotton prices gaining traction this year has neutralised by China buying cotton from Brazil and Australia. Yet, the traders are piling on their net long position in cotton futures, which indicates continuation of firm price trend for some more time.
For Monday, support for the March Cotton contract is at 92.51 cents and 91.52 cents, with resistance at 94.57 cents and 95.64 cents.
(By Commoditiescontrol Bureau: 09820130172)
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