Mumbai, 29 Mar (Commoditiescontrol): ICE cotton futures settled marginally higher on Thursday, gaining support from the federal reports that showed lower-than-expected U.S. planting estimates and firm export sales for the natural fibre.
Rise in oil prices, adding more than $1 a barrel, also extended support. Higher oil prices make cotton-substitute polyester more expensive.
ICE Cotton contracts for May closed at 91.38 cents, 61 points higher. Jul settled at 91.97 cents, adding 53 points. Dec ended 65 point strong at 83.99 cents. May settlement contract recorded second straight week of loss, down 15 point.
Front month contract closed March a net 8.2 cents/lb in the red after setting new highs in Feb.
Open interest in March peaked near 130,000 contracts at the Feb high, but has since slipped to near 110,000 contracts. December cotton open interest continues to build, now near 80,600 contracts. Dec cotton finished the week with a net 4 point gain and the month with a net 18 point gain.
The U.S. Department of Agriculture's (USDA) planting intentions said U.S. cotton planted area for 2024 is estimated at 10.7 million acres, below trade estimates of 10.9 million acres. However, the 2024 estimate was up 4% from last year.
The report added that compared with last year, acreage increases are expected in most cotton-estimating States, except Georgia, Kansas, New Mexico, Texas, and Virginia. Texas and Georgia, the largest cotton-producing States, are both expecting a 1% decrease in area planted to all cotton.
Meanwhile, the USDA's weekly export sales report showed net sales of 98,200 running bales (RB) for 2023/2024, up 8% from the previous week and 46% from the prior 4-week average. Cotton exports were listed at 360,721 RBs, for a season total of 6.724 million. That is now 2.5% ahead of last year’s pace, with unshipped sales still trailing by 5.7%. New crop sales reached 1.063 million RBs, which is still 22% behind last year’s pace.
U.S. private forecaster AccuWeather expects an above-average 2024 Atlantic hurricane season with a near-record number of storms and a greater-than-usual risk of direct impacts in parts of Florida, Texas and the Carolinas, it said on Wednesday.
There's expectation for better demand, especially from India and China and the demand will impact the ending stocks even more. 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 USDA will release the planting intentions report on March 28.
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.
March 26 Cotlook A Index was 45 points higher to 96.90 cents/lb. USDA’s FSA lowered the week’s Adjusted World Price of cotton by 162 points to 70.88 cents/lb. ICE certified stocks were shown at 52,224 bales as of March 27.
CFTC reported the cotton spec traders were dropping longs and adding new shorts during the week that ended Mar 19. That reduced their net long by 3,600 contracts to 89,522. Commercial cotton hedgers reduced their net short by 4,600 contracts to 127,900.
For Monday, support for the May Cotton contract is at 90.60 cents and 89.83 cents, with resistance at 92.06 cents and 92.75 cents.
(By Commoditiescontrol Bureau: 09820130172)
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