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Weekly: ICE cotton futures scaled higher amid weaker dollar, stronger grains & oil markets, robust demand outlook

27 Dec 2021 6:54 pm
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Mumbai (Commoditiescontrol): ICE cotton futures scaled higher this week amid weaker dollar, stronger grains & oil markets and robust demand outlook for the natural fiber eased concerns about the Omicron coronavirus variant.

The March 22 cotton contract closed with a gain of 182 points at 109.12 cents per lb, whereas the May 22 contract gained 135 points and finished at 107.05 cents per lb for the week ended on 23rd December. March 22-Dec 22 spread was 18.41 cents.

The market was trading in thin volume during the holiday period.

"Investors seem to have a general underlying feeling that Omicron may not be very severe and commodity prices will rise, moving into the new year," said an analyst.

Preliminary data suggested that the Omicron variant of the coronavirus was less severe than previously thought.

The U.S. Department of Agriculture's weekly export sales report on Thursday showed net sales of 243,900 running bales for 2021/2022, down 15 percent from the previous week and 21 percent from the prior 4-week average.

Although there is little doubt that all of the cotton will be committed by the end of the season, the relatively low shipments are causing concern among cash traders that the US may not be able to move the current 15.5 million bale USDA forecast.

Supply chain delays in other origins have led to a similar backlog in shipments, which means that there is a lot of cotton being held back that has yet to get through the system before it reaches retail stores. In other words, there is no shortage of cotton.

Cotton-on-Call based New York, dated 23rd December showed that the total unfixed call sales were reported at 143,045 vs 143,467 contracts on a weekly basis and total unfixed call purchases were reported at 39,267 vs 39,533. For March 2022, unfixed call sales were registered at 54,033 vs 56,015 contracts and unfixed call purchases were registered at 10,300 vs 10,997 contracts.

China cotton and yarn futures both closed up for the week. ZCE benchmark cotton yarn Jan22 futures was up by 30 points at 26,965 CNY/MT. On the other hand, ZCE benchmark cotton Jan22 futures was up by 10 points at 21,460 CNY/MT.

The majority of price action in cotton and most commodities seems to have been driven by the large “risk off” and “risk on” swings in outside markets.

The market will be closed for Christmas on Friday and will reopen on Monday.

Looking ahead next week, traders will continue to monitor export sales reports, and merchants will battle the fog of the current logistics situation to complete their sales. Outside markets will remain a key focus until after the holidays, when cash market activity picks up again.

Immediate support and resistance for Cotton #2 lies at 107.69 and 110.17 cents per lb, respectively.

(By Commoditiescontrol Bureau: +91-22-40015505)

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