ICE cotton futures settled mostly lower during the week ending April 12 (see chart above courtesy of Barchart.com). The most active Jul’24 settled the week at 84.59 cents per pound, down 3.23 cents from the previous Friday and 5.18 cents under Monday’s high. As of Thursday, April 11 the declining Jul’24 futures settled below the 200-day moving average, likely to begat more selling. The Dec’24 settled Friday at 80.11 cents per pound. Chinese cotton prices were flat-to-higher across the week, while the A-Index of world prices was flat-to-lower.
In other ag futures markets, old crop CBOT corn and KC wheat futures both had sideways, gyrating patterns this week, while CBOT soybeans flew a downward touch-and-go. The U.S. dollar index traded flat, took one large stair-step higher, and finished the week in a modest uptrend, owing to apparent investor flight-to-safety over Middle East tensions. Other macro influences (i.e., GDP, inflation, and interest rate policy) have mixed expectations for improvement.
Cotton-specific influences this week included neutral WASDE supply/demand revisions from USDA. This week saw continuingly modest U.S. export sales reported (as of April 4). One could say that this level of sales is decent given the calendar and demand response to recently weakening prices. Actual export shipments remain strong and above the level needed weekly average pace. USDA’s weekly summary of the U.S. regional markets reflected inactive/slow trading of physical cotton trading activity and light to moderate demand, across the U.S. regions. Several other standard predictors of U.S. cotton demand remain bearish looking, e.g., continued rising certified stocks (perhaps the merchants’ alternative to mill apathy in the wake of the large old/new crop inversion), as well as historically low levels of on-call sales.
ICE cotton futures open interest declined across the week. In association with this week’s declining price settlements, this has the the appearance of long liquidation. Indeed, the regular Tuesday (April 9) snapshot of weekly speculative positioning showed 3,006 fewer (liquidated) hedge fund longs reinforced by a 2,766 decline in the index fund net long position, week over week. The hedge fund short level was barely changed from the previous 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