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Weekly: ICE cotton futures end strong amid bullish undertone

30 Sep 2023 6:43 pm
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Mumbai, 30 Sep (Commoditiescontrol): Among agri-commodities, Cotton continues to remain in a defiant mode. The natural fiber collected gains during the just concluded week while the broader markets reeled under pressure from sluggish macro indicators and lingering fears of the U.S. government shutdown. However, for the month, cotton prices declined feeling the pressure from stronger dollar and demand concerns.

ICE cotton futures softened on Friday, after having climbed to their highest in a month on Thursday, succumbing to the dollar strength and profit taking.

ICE Cotton contracts for December ended at 87.15 cents, down 156 cents. March closed at 87.92 cents, 133 cents lower. May settled at 88.50 cents, losing 103 cents. The December contract ended up 124 points for the week, but lost 67 points for the month.

During the week, Cotton drew support from softer dollar, which eased 0.5% against its rivals, making the natural fiber less expensive for other currency holders. The dollar index held steady for the month and clocked a quarterly rise. A stronger dollar makes cotton less attractive to overseas buyers.

Cotton markets experienced selling from Brazil, while traders believe the demand to be grossly overstated. Brazil is on track for record cotton shipments in the 2023/24 commercial year, given the large crop and likely record sales in September.

On the other hand, the U.S. Department of Agriculture's (USDA) weekly export sales report showed net sales of 55,300 running bales of cotton for 2023/2024, down 48% from the previous week. The report showed exports of 159,400 running bales, up 6% from the previous week, primarily to China.

FAS reported 55,323 RBs of cotton was sold for export during the week that ended Sep 21. That was a low for the MY, but was up by 83% on year. Cotton shipments were 159,400 RBs for the week, bringing accumulated exports to 1.35m RBs. That is 26% behind last year’s pace.

The USDA in a weekly crop progress report said on Monday 30% of the cotton crop was in good to excellent condition compared with 29% last week. USDA reported 108,555 bales were classed for the week for 859,448 on the season. That is down from last year’s 945,138 bales.

The USDA Weekly Cotton Market Review had 17,515 bales sold at spot for the week with an average price of 83.15 cents/lb. The season’s sales reached 87,927 bales, compared to 26,300 last year.

The Cotlook A Index increased 10 points on Sep 28 to 98.35 cents/lb. FSA reduced the AWP for cotton by 2 points for the week to 72.27 cents/lb. ICE Certified Stocks increased another 2,400 bales to 37,512 as of Sep 28.

The weekly Commitment of Traders report had managed money with a 45,520 contract net long in cotton for Sep 26. That was a 1,200 contract weaker net long primarily via net new selling. Commercial cotton hedgers added 4,700 new longs and 1,200 new shorts for a 91,911 contract net short.

Cotton markets future is evenly poised in the near term with likely increase in volatility. The overall risk for the upside and the downside appear fairly balanced. Hence, the market is likely to witness choppy session.

For Monday, support for the December Cotton contract is at 86.35 cents and 85.55 cents, with resistance at 88.62 cents and 90.09 cents.

(By Commoditiescontrol Bureau: 09820130172)

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