The week ending Friday, April 8 saw the nearby May’22 ICE cotton contract climb over 140 cents and then switching into a down trend to Friday’s settlement at 132.41 cents per pound (see chart above courtesy of Barchart.com). In contrast, the new crop Dec’22 contract climbed to life-of-contract highs above 114 cents per pound, and plateaued there, settling the week at 115.58. Chinese and world cotton prices were mixed this week.
Cotton-specific influences this week included neutral and unsurprising supply and demand adjustments from USDA. U.S. cotton export sales were weak, but shipments were very strong. New crop dynamics continue under the influence of the drought/weather market.
ICE cotton futures open interest rose and fell across the week, as did the futures price settlement pattern. This could reflect a split pattern of net buying and then liquidation, within the context of regularly scheduled fund rolling (which explains the high volume). Indeed, the regular Tuesday snapshot (through April 5) reflected more long positioning with 2,157 more hedge fund longs, week over week, on top of 676 fewer hedge fund shorts. This increase in net buying was offset some by realizing 1,279 fewer index fund longs, week over week.
U.S. grain and oilseed futures prices rose early, traded flat going in to Friday’s WASDE report, and then settled the week higher. The U.S. dollar index trended higher this week.
For more details and data on Old Crop and New Crop fundamentals, plus other near term influences, follow these links (or the drop-down menus above) to those sub-pages.
Source: TAMU