Mumbai, 18 Jun (Commoditiescontrol): ICE cotton futures fell nearly 3% on Monday, reaching their lowest level in over three and a half years. The decline was driven by a stronger U.S. dollar and favorable weather conditions expected to boost supplies in key growing regions. The July ICE cotton futures contract dropped 103 points, settling at 69.94 cents per pound, while the December contract fell 37 points to 71.77 cents. The March contract decreased by 38 points, closing at 73.05 cents. Last week, July futures declined by 287 points, and December futures by 75 points, with smaller declines in deferred contracts ranging from 8 to 34 points.
The recent dip into the 70-cent range triggered a price limit reduction to 3 cents per pound. The dollar rose for the third consecutive session, approaching a one-month high, making cotton more expensive for overseas buyers. Traders noted that the stronger dollar, favorable weather, and the approaching first notice day contributed to the price pressure.
Regarding weather conditions, parts of Texas are expected to receive favorable precipitation over the next week, benefiting crop conditions. A report from the National Agricultural Statistics Service (NASS) showed cotton planting at 90%, slightly below average. The crop was also reported at 22% squared, 4% above normal, with 6% setting bolls. Condition ratings fell by 2% to 54% good/excellent, with the overall score on the Brugler500 index down 7 points to 346.
USDA export data revealed sales of 186,600 running bales (RB), up 19% from the previous week but 3% below the four-week average. China, the leading consumer, accounted for 73,400 RB. Net sales for the 2023/2024 marketing year rose by 28% from the previous week but were 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 indicated a reduction of 500,000 bales in U.S. export projections, now at 11.8 million bales. Consequently, old crop stocks increased by 450,000 bales to 2.85 million, and new crop ending stocks rose 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 reduced trade and consumption. ICE certified cotton stocks were down 264 bales on June 14 to 137,983 bales. The USDA Average World Price (AWP) fell by 81 points to 57.32 cents per pound last week.
China's agriculture ministry raised its cotton import forecast for the 2023/24 crop year by 200,000 metric tons. Traders are closely monitoring technical support levels for the December contract at 70.41 and 69.04 cents, with resistance at 72.73 and 73.68 cents. The CFTC data showed managed money spec funds at their largest net short position in nearly five years, totaling 35,735 contracts, an increase of 11,827 contracts for the week ending June 11.
(By Commoditiescontrol Bureau: 09820130172)
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