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Mumbai, 4 Mar (Commoditiescontrol): Cotton prices knocked down the 100 cent mark during the week ended March 1, with all active contracts climbing above the psychologically important level, driven by the demand optimism. However, the price burst could not last long as technical spec base selling got activated, but it hardly prevented the board from clocking their eighth straight week of gain.
Cotton had several limit moves this week, starting with limit up and ending with limit down on Friday.
ICE cotton futures ended Friday's session limit down, as weaker U.S. sales raised demand concerns, prompting liquidation pressure accross the board. Further, weakness in the grains market weighed on the natural fiber market. On Wednesday, natural fiber prices over hit one-year high.
ICE Cotton contracts for May closed at 95.57 cents, 400 points lower. Jul settled at 93.77 cents, losing 400 points. Dec ended 86 point weak at 83.81 cents.
Old crop cotton futures will see expanded 5 cent limits on Monday after ending the Friday session down the limit.
Board strength earlier in the week kept prices 2c higher for the week’s net move. May was up 208 points or 2.22% on the week. New crop futures were 86 points lower on Friday and a net 44 points weaker Friday to Friday.
Earlier this week, cotton prices moved higher as tighter US stocks and decent export demand has the market doing its best to ration out demand. Seasonally, cotton prices tend to rise into the spring. The complex also draw support from the Weaker dollar while softer oil prices applied pressure. Fall in oil prices make polyester, a cotton substitute, less expensive.
The complex endured profit taking in forward contract as the recent streak of gains, cotton prices posted sixth-straight week of gain, prompted speculative buying as analysts and traders remained optimistic about the natural fibre market maintaining upward momentum.
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.
USDA’s FAS reported 39,966 RBs of cotton was sold for export. That was a new MY low. Cotton exports were 267,115 RBs for the week, bringing the season total to 5.343 million. Commitments are now 0.5% behind last year’s pace with 10.477m RBs on the books.
Texas Governor Greg Abbott on Tuesday issued a disaster declaration for 60 counties and directed the Texas Division of Emergency Management to activate more than 95 firefighters as well as personnel to close roads, control traffic, offer medical aid, and provide livestock support.
Elsewhere, Australia could be heading for its third-warmest summer on record. It is now growing summer crops, such as sorghum and cotton, with planting of much larger crops of wheat, barley and canola set to begin around April and May.
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.
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 Cotlook A Index for Feb 28 was 370 points higher at 105.25 cents/lb. The Seam recorded 5,791 bales sold on Feb 27 for an average price of 89.1 cents/lb. The AWP was updated to 77.47 cents/lb on Thursday afternoon, a 235 point increase from the week prior. ICE certified stocks were 1,022 bales as of Feb 29.
CFTC’s weekly Commitment of Traders report showed managed money funds were adding new longs in cotton during the week that ended Feb 27. That net new buying strengthened their net long by 7,900 contracts to 94,038. The commercial cotton hedgers added 3,400 new short hedges and dropped 1,600 longs for a 134,264 contract net short as of Feb 27.
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 93.99 cents and 92.42 cents, with resistance at 98.72 cents and 101.88 cents.
(By Commoditiescontrol Bureau: 09820130172)
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