Mumbai, 05 Dec (Commoditiescontrol): ICE cotton futures ended relatively unchanged on Wednesday as a retreating U.S. dollar and strength in oil markets offered support, while traders turned their attention to the U.S. Department of Agriculture's (USDA) upcoming weekly export sales report.
The benchmark March cotton contract eased by just 2 points, closing at 71.25 cents per pound. Nearby May and July contracts also edged slightly lower, finishing at 72.50 cents and 73.43 cents, respectively.
Despite recent pressure, the March contract posted a modest 10-point gain over November, reflecting stable underlying market fundamentals. Broader external factors, however, contributed to uncertainty. The U.S. dollar index steadied after a pullback, while crude oil prices slipped by $1.23 per barrel following a brief rally above $70.
The USDA's recent export sales reports showed strong demand for U.S. upland cotton, with marketing year highs reported over two consecutive weeks. However, shipments dropped to 130,318 running bales (RB), though they remain significantly higher compared to the same period last year. Traders are closely monitoring Thursday's USDA report for further indications of demand trends.
On the global front, competition from Brazil continues to weigh on U.S. cotton exports, adding pressure to prices. The USDA recently slashed its U.S. cotton production forecast for the 2024/25 season to 5.2 million bales, marking a 28% year-on-year decline due to reduced acreage and lower yields in key growing regions such as Punjab.
Domestically, harvesting progress remains robust, with 84% of U.S. cotton fields harvested as of the latest data, surpassing the five-year average of 80%. The USDA’s Cotton Ginnings report revealed that 6.852 million RB were processed by mid-November, up 20% compared to last year.
Market activity reflected a cautious tone, with The Seam reporting sales of 3,500 bales on December 3 at an average price of 63.27 cents per pound. ICE certified cotton stocks remained steady at 13,274 bales, while the Cotlook A Index slipped by 50 points to 81.75 cents per pound. The USDA Adjusted World Price (AWP) was raised by 162 points to 57.53 cents per pound, with an update expected Thursday.
From a technical perspective, cotton futures remain below key moving averages, signaling bearish sentiment. March contract support levels are pegged at 70.81 and 70.37 cents, while resistance lies at 71.77 and 72.29 cents. Market participants anticipate price volatility ahead, particularly given muted demand from major importers like China and the ongoing challenges posed by global competition.
(By Commoditiescontrol Bureau: 09820130172)
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