Mumbai, 20 September (Commoditiescontrol): ICE cotton futures ended lower this week amid stronger dollar. Cotton futures struggled to find direction this week, under various influences that included weather concerns as well as USDA’s supply and demand and export reports.
The most active December cotton contract closed with a loss of 117 points or 0.60 percent at 92.33 cents per lb, whereas March 22 contract lost 114 points or 0.60 percent and finished at 91.59 cents per lb for the week ended on 17th September.
"The dollar is on the rise again. But the demand has been pretty good, issue is merchants don't have their hands on the crop yet, and cotton at 90 cents is a rich price," said an analyst. "On the technical front, cotton prices have good support around 92 cents and we have strong resistance at 95 cents."
The dollar rose to a near four-week high against its rivals, potentially limiting demand for the natural fiber by making it more expensive for buyers holding other currencies.
The U.S. Department of Agriculture's weekly crop progress report on Monday showed 64 percent of the cotton crop was in a good-to-excellent condition in the week ending Sept. 12, up from 61 percent in the prior week.
The U.S. Department of Agriculture's weekly export sales report on Thursday showed exports of 237,500 running bales (RB) of cotton, up 53 percent from the previous week, with increases primarily for China, Pakistan and Vietnam.
The weekly data release from CFTC showed managed money was 91,917 contracts net long on 14th September; up 810 contracts from the previous week. Long side positions increased by 1,400 contracts, while short side positions witnessed a rise of 590 contracts. Trade increased their long side position by 179 contracts and short decreased by 2,592 contracts. The open interest for the week was registered at 330,498 vs 332,370 contracts last week.
Cotton-on-Call based New York, dated 16th September showed that the total unfixed call sales were reported at 156,646 vs 155,528 contracts on a weekly basis and total unfixed call purchases were reported at 41,957 vs 42,170 contracts. For December 2021, unfixed call sales were registered at 50,545 vs 52,520 contracts and unfixed call purchases were registered at 17,641 vs 18,148 contracts.
China cotton and yarn complex closed down last week. ZCE benchmark cotton yarn was down for the fifth consecutive week. Jan 22 futures contract was down by 1.13 % at 24910 CNY/MT . On the other hand ZCE benchmark cotton Jan22 futures was down 1.71% at 17440 CNY/MT.
Looking ahead next week, traders will be eyeing a crop condition update on Monday, which may offer some insight into the recent hurricane adversities. Then, on Thursday, USDA will issue its weekly export sales.
Apart from above factors price will largely depend on price movement in US dollar which in turn will depend on U.S. Federal Reserve when it will start withdrawing its bond buying program. Fed meeting is on Sep21-22,it is anticipated to leave the door open to decreasing its monthly asset purchases if it happens so it will lead to stronger dollar and weaker commodity prices including cotton. support and resistance for Cotton #2 lies at 91.69 and 93.21 cents per lb, respectively.
(By Commoditiescontrol Bureau: +91-22-40015505)
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