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ICE Cotton Prices Dip Ahead of Holiday, But Posts Weekly Gains on Strong China Demand

25 May 2024 9:13 am
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Mumbai, 25 May (Commoditiescontrol): ICE cotton futures settled lower on Friday, ahead of the holiday weekend, but ended the week with notable gains, driven by robust demand from China and strong U.S. export sales data.

The July cotton contract fell by 120 points to close at 80.52 cents per pound, while December contracts dropped 61 points to 78.01 cents, and March contracts decreased by 51 points to 79.52 cents per pound. Despite Friday's decline, the July contract rose by 463 points for the week, benefiting from a significant midweek rally. The trading limits for cotton have now returned to 400 points, with the July contract maintaining its position above 80 cents.

Boosting trader sentiment, the USDA's weekly export sales report on Thursday indicated a rise in both net sales and exports, primarily to China. For the 2023/24 season, net sales to China were 104,400 RB, and for 2024/25, they were 13,200 bales. Exports to China reached around 84,600 bales. This data propelled cotton futures more than 3% higher on Thursday.

In its latest report, the USDA's National Agricultural Statistics Service (NASS) noted that 44% of the U.S. cotton crop had been planted by Sunday, up 11% from the previous week and in line with the five-year average, slightly ahead of last year's pace. However, Texas and Georgia lagged slightly behind their five-year averages.

On the global front, the USDA's World Agricultural Outlook Board (WAOB) revised its carryout estimates for the 2023/24 cotton season down by 2.6 million bales to 80.48 million, due to a smaller carry-in. Conversely, it projected an increase in 2024/25 ending stocks by 2.53 million bales to 83.01 million.

Additional market data showed that The Seam reported sales of 13,216 bales on May 22 at an average price of 79.63 cents per pound. ICE certified cotton stocks rose by 1,283 bales on May 23, reaching 192,805 bales. The Cotlook A Index increased by 300 points on May 23 to 88.60 cents per pound. The Adjusted World Price (AWP) for the next week was up 62 points to 60.08 cents per pound as of Thursday.

The CFTC’s Cotton On-Call report indicated a reduction in unfixed call sales for July by 2,283 contracts, totaling 13,769 as of May 17. Managed money speculators in cotton futures and options increased their net short position by 8,058 contracts as of May 21, bringing the total to 23,372 contracts, the highest in nearly 14 months.

Traders are closely monitoring technical support levels for the July cotton contract at 79.31 and 78.10 cents, with resistance levels at 81.95 and 83.38 cents.

(By Commoditiescontrol Bureau: 09820130172)

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