Mumbai, 19 Feb (Commoditiescontrol): Its a repeat of the past week's performance for the cotton complex. The natural fiber markets closed the week to Feb 16th, much stronger though helped by the recent streak of positive exports data and tighter global supplies.
ICE cotton futures recorded moderate losses on Friday, but managed to post their sixth straight week of gains, as analysts and traders remain optimistic about the natural fibre market maintaining upward momentum led by speculative buying.
Cotton complex recently benefited from a rally sparked by technical buying and lower stocks, while a federal report showing firm exports. These factor have added to the upbeat sentiment.
The monthly World Agricultural Supply and Demand Estimate (WASDE) update showed a 150,000 bale lighter U.S. domestic cotton use, now at 1.75 million bales. Exports, however, were raised by 200,000 bales to offset. On net ending stocks tightened by 100,000 to 2.8 million in the report.
ICE Cotton contracts for Mar closed at 94.61 cents, 2 points lower. May settled at 95.23 cents, losing 6 points. Jul ended 13 point weak at 95.20 cents.
Cotton futures faded into the weekend with Friday losses of 74 to 90 points. March was still up by 209 points or 2.28% for the week to the highest price since the May contract high at 96.97 cents. Dec rounded out the week with a net 86 point gain.
The dollar index gained 0.3%, making the natural fibre less attractive to overseas buyers. Oil prices were largely flat amid unclear demand scenarios. Higher oil prices make polyester, a cotton substitute, more expensive
Meanwhile, the USDA’s Ag Outlook Forum showed cotton acreage estimated at 11 million acres this for this spring. That is a 7.5% increase vs. a year ago. Analysts surveyed ahead of the report expected a modest 300-400,000 acre increase vs. 2023.
The U.S. Department of Agriculture (USDA) in it weekly export sales report showed exports of 276,100 running bales were up 11% from the previous week and 6% from the prior 4-week average. The destinations were primarily to China, Vietnam and Pakistan.
But the report also noted net sales of upland cotton totalling 160,500 running bales for 2023/2024 were down 44% from the previous week and 49% from the prior 4-week average. The sales are still running at a solid pace. Cotton export sales commitments for 23/24 are now 10.307 million RB, which is now 89% of USDA’s current cotton export forecast matching the 89% average pace for this point in the MY.
Weekly cotton bookings were 160,465 RBs for the week that ended Feb 8. That was a 2% drop wk/wk, but was an 11% increase vs the same week last year. USDA listed the week’s shipment at 276,000 MT. That brought the yearly total to 1.82m RBs – a 3% lag from last year. Adding the unshipped sales has commitments at 10.31m RBs – a 4% lead vs last season’s pace.
USDA’s weekly Cotton Market Review showed 26,614 bales were sold during the week, averaging 88.52 cents/lb.
The Cotlook A Index was back over a dollar with a 195 point increase on Feb 15 to 101.45 cents/lb. The updated AWP was listed at 73.44, another 340 points higher for the week. ICE certified stocks remained at 999 bales for Feb 15.
Elsewhere, India's cotton exports in February are set to jump to the highest level in two years, as a rally in global prices has made Indian cotton attractive for Asian buyers who earlier sourced the fibre from Brazil and the United States, traders said.
CFTC reported managed money cotton traders were net new buyers during the week that ended Feb 13. That grew their net long by 25,000 contracts to 71,559. The commercial hedgers were shown with 16,000 fewer longs and 13,000 new shorts on Feb 13, which left them on a 119,795 contract net short.
After managing to break the shackles of poor demand and analysts expectations, the Cotton prices have maintained firm tone so far. The skepticism about the U.S. cotton prices gaining traction this year has neutralised by China buying cotton from Brazil and Australia. Yet, the traders are piling on their net long position in cotton futures, which indicates continuation of firm price trend for some more time.
For Monday, support for the March Cotton contract is at 93.15 cents and 91.89 cents, with resistance at 96.05 cents and 97.69 cents.
(By Commoditiescontrol Bureau: 09820130172)
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