Mumbai, 19 Mar (Commoditiescontrol): ICE cotton futures ended strong on Monday, helped by robust industrial output and retail sales data from top consumer China, while a slightly higher dollar kept a lid on gains. The dollar index rose 0.1%, making the natural fibre more expensive for buyers overseas.
Support also spilled from the higher equities and oil markets into the natural fibre. Higher oil prices make cotton-substitute polyester more expensive.
ICE Cotton contracts for May closed at 94.57 cents, 63 points higher. Jul settled at 94.26 cents, adding 67 points. Dec ended 13 point strong at 83.81 cents.
The May cotton futures were 163 points off their 226 point gain for the close, though the nearby contracts were still 1 to 67 points higher at the close. For the week, the May contract recorded a net 134 point loss or 1.40%. Dec cotton finished the week with a net 69 point gain or 0.92%.
The United State Department of Agriculture (USDA) Weekly Export Sales data had 85,845 RBs of cotton booked for the week that ended Mar 7. That was up 65% for the week, but marked the 3rd consecutive sub-100,000 RBs week. Shipments were listed at 292,282 RBs for a running total of 5.97 million. Shipments at the same time last year were 5.95 million RBs. Commitments remain 2.3% behind last year’s pace compared to the WASDE's previous forecast 3.7% year on year export decline.
Last Friday, USDA came out with the market friendly info. The federal agency surprisingly cut the cotton yield by another 23 lbs per acre to 822. That lowered production and tightened stocks with no other change to use. Cotton stocks are now projected at the tightest since 12/13 at 2.5 million lbs. Stocks/Use is still just a 2-year low.
Last Thursday, FAS reported 52,000 RBs of cotton was sold for export during the week that ended Feb 29. That was up from the MY low last week but still 100,000 RBs shy of the 4-wk average. The week’s exports were listed at 331,000 RBs.
There is expectation for better demand, especially from India and China and the demand will impact the ending stocks even more, dealers said. Yet, stifled demand due to high cotton prices above 90 cents, makes it difficult for mills to buy, which is pressurizing the market. A slight decrease in supply and demand is expected in the near term, with prices likely to remain volatile but will hold between 90-96 cents.
The USDA World Agricultural Supply and Demand Estimates (WASDE) report on Friday noted that 2023/24 U.S. cotton forecasts show lower production and ending stocks relative to last month. The report also showed global cotton consumption is almost 500,000 bales higher with gains for China and India. The U.S. Department of Agriculture (USDA) will release the planting intentions report on March 28.
Meanwhile, a U.S. weather forecaster on Thursday projected El Nino conditions will likely end by spring this year but saw a 62% chance that a weather pattern characterized by unusually cold temperatures in the Pacific Ocean, La Nina, will develop during June-August.
Elsewhere, the Australian agriculture ministry raised its estimate for the country's 2023/24 cotton production. It estimated cotton production at 1 million tons versus previous forecast of 925,000 tons.
The Cotlook A Index for was down by 135 points to 98.45 on Mar 15. USDA’s weekly Cotton Market Review showed 11,320 bales were sold at an average price of 89.25 cents/lb. The updated AWP is 76.10 cents/lb for the week through Thursday. ICE certified stocks added another 1,100 bales to 27,765 as of Mar 13.
This week’s Commitment of Traders report revealed managed money spec funds trimming 3,201 contracts from their net long in cotton futures and options. They took that net position to 93,160 contracts as of Tuesday March 12.
For Tuesday, support for the May Cotton contract is at 93.51 cents and 92.46 cents, with resistance at 95.91 cents and 97.26 cents.
(By Commoditiescontrol Bureau: 09820130172)
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