MUMBAI, 25 Jun (Commoditiescontrol): ICE cotton prices experienced a significant rebound on Monday, reaching a more than two-week high. This rally was primarily driven by a weakening dollar and additional support from the grains and oil markets. The July ICE cotton futures contract surged by 310 points, closing at 71.29 cents per pound. Similarly, the December contract rose by 118 points to 73.39 cents, while the March contract saw a gain of 123 points, ending at 74.83 cents.
Monday marked the First Notice Day (FND) for deliveries against July contract futures, resulting in a substantial 310-point increase. External factors also played a crucial role in boosting cotton prices. Crude oil prices climbed by $1.01 per barrel, and the US dollar index dropped by 298 points.
The previous week saw a decline in July futures by 287 points and December futures by 75 points, with minor decreases in deferred contracts ranging from 8 to 34 points. The dip into the 70-cent range earlier in the week prompted a price limit reduction to 3 cents per pound, following cotton futures hitting a 19-month low.
Market participants are now eagerly awaiting the U.S. Department of Agriculture's (USDA) annual acreage report, scheduled for release on Friday, June 28, at noon EDT (1600 GMT).
The latest weekly NASS Crop Progress report indicated that 94% of the US cotton crop had been planted, slightly behind the 96% average pace. The report also noted that 30% of the crop had squared and 8% had set bolls, both metrics being ahead of the normal pace. Condition ratings improved by 1% to 56% good/excellent, although the Brugler500 index dropped by 4 points due to an increase in very poor ratings to 342.
USDA export data revealed sales of 186,600 running bales (RB), a 19% increase from the previous week but 3% below the four-week average. China, the largest consumer, accounted for 73,400 RB. Net sales for the 2023/2024 marketing year increased by 28% from the previous week, despite being 2% lower than the prior four-week average.
Weaker-than-expected shipments further pressured cotton prices. The USDA's World Agricultural Supply and Demand Estimates (WASDE) report adjusted U.S. export projections down by 500,000 bales to 11.8 million. Consequently, old crop stocks rose by 450,000 bales to 2.85 million, and new crop ending stocks increased by 400,000 bales to 4.1 million.
Globally, the 2023/24 carryout increased by 490,000 bales to 80.97 million, while new crop projections rose by 489,000 bales to 83.49 million, reflecting higher beginning stocks and production but lower trade and consumption.
ICE certified cotton stocks dropped by 8,678 bales on June 21, totaling 127,978 bales. There were 9,832 decertifications, 1,154 new certifications, and 1,093 bales awaiting review. The Cotlook A Index remained steady at 82.70 cents per pound on June 21. Meanwhile, the USDA Average World Price (AWP) fell by 67 points to 56.65 cents per pound on Thursday, a rate that will be effective through next week.
CFTC data showed speculators in cotton futures and options nearing a record net short position as of June 18, totaling 44,019 contracts. This represented a shift of 8,284 contracts to the short side that week, nearing the record net short of just over 3,000 contracts.
Traders are closely watching technical support levels for the December contract at 71.59 and 71.04 cents, with resistance at 72.65 and 73.16 cents.
(By Commoditiescontrol Bureau; +91 98201 30172)
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