Mumbai, 14 Dec (Commoditiescontrol): ICE cotton futures declined by nearly 1% on Friday, marking their second consecutive weekly loss as a stronger U.S. dollar and concerns over diminished demand from top buyer China weighed on market sentiment.
The March cotton contract dropped by 82 cents, settling at 69.27 cents per pound, while the May and July contracts also closed lower at 70.41 cents and 71.41 cents per pound, respectively.
The market faced mixed signals from external factors, with the U.S. dollar index edging higher, adding pressure on cotton prices, while crude oil prices climbed $1.07 per barrel. Traders highlighted that the strong dollar reduces the competitiveness of U.S. cotton in international markets. Additionally, weak buying activity from China further dampened sentiment. A trader noted that China is unlikely to emerge as a significant buyer due to its ongoing economic challenges, including deflation, despite the country's efforts to stimulate growth with an "appropriately loose" monetary policy planned for next year.
The latest federal export sales report reflected subdued demand, with weekly export sales totaling 152,989 running bales (RB), a nine-week low and a 10.36% decline from the previous week. Vietnam led buyers with 75,800 RB, followed by Pakistan with 50,700 RB. However, shipments also declined, down 12.78% to 137,408 RB, with Pakistan and China receiving 29,200 RB and 27,800 RB, respectively.
Other indicators underscored market weakness. Online sales on The Seam totaled 5,661 bales at an average price of 64.99 cents per pound on December 12. ICE certified cotton stocks remained unchanged at 20,113 bales. Meanwhile, the Cotlook A Index rose by 65 points to 80.25 cents per pound, but the USDA Adjusted World Price (AWP) dropped by 152 points to 56.22 cents per pound. Speculative funds increased their net short positions by 5,840 contracts to 22,223 contracts as of December 12, according to Commitment of Traders data.
From a technical perspective, the March cotton contract remains below key moving averages, indicating continued market weakness. Analysts identified support levels at 68.96 and 68.64 cents, with resistance at 69.83 and 70.38 cents. Despite the bearish outlook, analysts suggest current price levels might attract buyers, as cotton appears undervalued. This potential demand could provide a silver lining for the market in the coming weeks.
(By Commoditiescontrol Bureau: 09820130172)
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