Mumbai, 28 Mar (Commoditiescontrol): ICE cotton futures settled lower on Wednesday, as traders hunkered down for the U.S. Department of Agriculture's (USDA) planting intention report due this week.
The U.S. dollar index firmed 0.1%, making cotton more expensive for buyers holding other currencies.
ICE Cotton contracts for May closed at 90.77 cents, 264 points lower. Jul settled at 91.44 cents, losing 242 points. Dec ended 96 point weak at 83.34 cents. May settlement contract lost 1.8% last week.
The old crop market faded by more than 2 pennies per pound, though the new crop futures firmed up off their session lows for the bell. New crop prices were still 82 to 96 points in the red, though Dec was 33 points off the low.
The USDA will release the planting intentions report later today. The weekly export sales report is also due on the same day.
Analysts estimate 2024 U.S. plantings of cotton at 10.906 millions of acres versus 10.230 millions of acres in 2023, a Reuters poll showed.
Last week, the USDA Weekly Export Sales data from the week that ended Mar 14 showed 92,620 RBs of old crop cotton and 40,500 RBs of new crop was sold. That brought old crop commitments to 10.71m RBs, a 4% lag from last year’s pace, and new crop commitments to 99,500 RBs, still 27% behind last year's pace. That is 6% back of the 99% average pace for this point in the MY. Shipments were tallied at MT high of 397,297 RB. That took the MY total to 55% of the USDA forecast, 2% ahead of the average pace.
The destinations were mainly China at 183,700 RB and Vietnam at 61,300 RB. China is one of the top consumers of U.S. cotton.
The report also showed net sales of 92,600 RB for 2023/24, up 8% from the previous week and 20% from the prior 4-week average.
There's expectation for better demand, especially from India and China and the demand will impact the ending stocks even more, dealers said. Yet, stifled demand due to high cotton prices above 90 cents, makes it difficult for mills to buy, which is pressurising the market. A slight decrease in supply and demand is expected in the near term, with prices likely to remain volatile but will hold between 90-96 cents.
The USDA World Agricultural Supply and Demand Estimates (WASDE) report on Friday noted that 2023/24 U.S. cotton forecasts show lower production and ending stocks relative to last month. The report also showed global cotton consumption is almost 500,000 bales higher with gains for China and India. The USDA will release the planting intentions report on March 28.
Meanwhile, a U.S. weather forecaster on Thursday projected El Nino conditions will likely end by spring this year but saw a 62% chance that a weather pattern characterized by unusually cold temperatures in the Pacific Ocean, La Nina, will develop during June-August.
Elsewhere, the Australian agriculture ministry raised its estimate for the country's 2023/24 cotton production. It estimated cotton production at 1 million tons versus previous forecast of 925,000 tons.
The Seam recorded 4,299 bales sold online for Mar 26 at an average gross price pf 79.32 cents. The Cotlook A Index was 45 points higher to 96.90 cents/lb. The AWP is 72.50 cents per pound, in effect for farm program purposes through Thursday. ICE certified stocks were shown at 41,756 bales as of Mar 20.
CFTC reported the cotton spec traders were dropping longs and adding new shorts during the week that ended Mar 19. That reduced their net long by 3,600 contracts to 89,522. Commercial cotton hedgers reduced their net short by 4,600 contracts to 127,900.
For Thursday, support for the May Cotton contract is at 89.75 cents and 88.73 cents, with resistance at 92.60 cents and 94.43 cents.
(By Commoditiescontrol Bureau: 09820130172)
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