Mumbai, 24 May (Commoditiescontrol): ICE cotton futures climbed on Thursday, reaching a peak not seen in over a month, driven by robust demand from China and concerns about production in flood-affected Brazil. The July cotton contract increased by 234 points, closing at 81.72 cents per pound. December contracts rose by 134 points to 78.62 cents, and March contracts went up 120 points to 80.03 cents per pound. This rise follows a 1.7% decline in the July contract last week.
Flooding in southern Brazil threatens to disrupt the sowing of multiple crops, contributing to production concerns. However, other market factors tempered cotton price gains, with crude oil prices dropping by 53 cents and the U.S. dollar index rising by 104 points.
The U.S. Department of Agriculture's (USDA) weekly export sales report showed a decrease in exports to 204,100 running bales (RB), down 15% from the previous week and 12% from the prior four-week average. Despite this, net sales and exports to China increased, with net sales for 2023/24 at 104,400 RB and for 2024/25 at 13,200 bales. Exports to China totaled around 84,600 bales.
The USDA's National Agricultural Statistics Service (NASS) reported that 44% of the U.S. cotton crop had been planted by Sunday, an 11% increase from the previous week, aligning with the five-year average and slightly ahead of last year. Texas and Georgia were slightly behind their five-year averages.
Globally, the USDA's World Agricultural Outlook Board (WAOB) reduced its carryout estimates for the 2023/24 cotton season by 2.6 million bales to 80.48 million, due to a smaller carry-in. However, it projected an increase in 2024/25 ending stocks by 2.53 million bales to 83.01 million.
Additional market data included 1,324 bales sold on The Seam platform on May 22 at an average price of 84.17 cents per pound. ICE certified cotton stocks decreased by 44 bales, totaling 191,522 bales. The Cotlook A Index remained steady at 85.60 cents per pound, and the AWP for the next week increased by 62 points to 60.08 cents per pound.
CFTC’s Cotton On-Call report showed a reduction in unfixed call sales for July by 2,283 contracts to 13,769 as of May 17. Despite occasional rallies, the cotton market faces ongoing pressure from weak demand and profit-taking, with traders closely monitoring weather conditions, planting progress, and potential impacts from President Joe Biden's recent tariff increases on Chinese imports.
(By Commoditiescontrol Bureau: 09820130172)
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