ICE cotton futures gyrated sideways for the start of the week ending April 25 before downshifting and finishing the week in a lower, narrower sideways band (see chart above courtesy of Barchart.com). The most active Jul’24 contract settled Friday at 80.90 cents per pound, down 18 points on the day. The new crop Dec’24 settled Friday down a third of cent at 77.31 cents per pound. Chinese cotton prices were mostly lower this week while the A-Index of world prices was flat-to-lower.
In other ag futures markets, old crop CBOT corn and soybeans both shifted higher and then traded sideways this week. KC wheat futures followed a gradual uptrend. The U.S. dollar index came in for a landing but bounced up on a late touch-and-go. Dollar strength late in the week appeared influenced by stronger U.S. economic indicators which lowered expectations of immanent interest rate cuts. Other macro influences (i.e., GDP, inflation, and interest rate policy) continued to reflect mixed expectations.
Cotton-specific influences this week included scattered rainfall from the Texas Rolling Plains to the Atlantic. This week saw a continuation of stronger U.S. export sales reported (reflecting sales through April 18). Actual export shipments remain just under 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, as well as historically low levels of on-call sales.
ICE cotton futures open interest eroded for the week ending April 25. In association with this week’s mixed price settlements, the speculative long liquidation of recent weeks may be tapering off. Well, not yet… at least not through last Tuesday (April 23) whose snapshot of weekly speculative positioning showed 8,468 fewer (liquidated) hedge fund longs plus a 1,349 contract reduction in the Index Fund net long position. These long liquidations were further reinforced by 12,132 new outright hedge fund shorts.
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