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ICE Cotton Gains as West Texas Weather Concerns Persist; Eyes on Weekly Exports & WASDE

8 Apr 2021 8:01 am
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Mumbai (Commodities Control) – For most of the Wednesday session, ICE cotton traded both sides of Tuesday’s close. However later in the day, the market gathered a bit of a bullish steam and finished higher. Traders are well aware of the USDA’s forthcoming reports. 

ICE cotton futures were supported by concerns that dry weather in West Texas, the largest U.S cotton-producing region, may weigh on U.S supplies of the crop. Cotton contracts for May 21 closed at 79.5 cents per lb, up 28 points, Jul 21 Cotton closed at 80.84 cents , up 37 points, and Dec 21 Cotton closed at 80.04, up 63 points.

The market is likely waiting for some further developments with cotton planting and weather, especially in West Texas, said Jon Marcus, president of Lakefront Futures and Options brokerage in Chicago.

Also boosting sentiment for cotton were gains in the U.S. corn and soybean markets.

Now the market awaits weekly export-sales on Thursday, followed by Friday’s April supply-demand report. Both reports will be key to the psyche of the market. For export-sales, it’s a chance at redemption over last week’s poor showing, and for the supply/demand report, it is an obvious opportunity to lower the supply and increase the demand.

"The May (cotton) contract should experience resistance near 81.00-82.00 and support near 77.00–78.00 over the near- to medium-term," Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.

Increased volatility and drought conditions in Texas could move December cotton futures into the high 80s or low 90s, Rose added.

Meanwhile, U.S monthly Census data showed February cotton exports were 1.571m bales. That was down 3% from January and down 20% from Feb 2020.

Total futures market volume fell by 13,874 to 34,965 lots. Data showed total open interest gained 985 to 229,592 contracts in the previous session.

Support and resistance for Cotton #2 lies at 78.68 cents and 80.48 cents per lb, respectively.



       
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