US Cotton futures is now witnessing a bull run due to sound fundamental and economic factors, according to Louis W Rose, a leading cotton researcher and analyst in Rose Report.However, analysts pointed out that speculative interest was behind the rise in US futures and may not have any appreciable impact on Indian markets.
This week's cotton export report showed net sales near 55 K RBs while shipments were a robust 345 K RBs for all cotton, the Rose Report said. Both net sales and shipmennt figures exceeded the per week requirements to mee the USDA's revised 10.7 M statistical bale export projects. Sales cancellations were a sparse 15 K RBs.
China cotton demand has been supportive of prices and good quality of US cotton supplies has ensured that 80% of the current crop has been sold out.
CFTC report for week ending March 11 shows 8% growth in futures net long positions for speculative funds and holders of non-reportable positions while there was 21% growth in futures and options combined net long positions. Buying activity has intensified near to $0.90 per pound levels, the repeort analysing CFTC data said.
"Next week will be light with respect to cotton and economic reports, but the USDA final cotton ginning report is scheduled for release on Mar 25 and, given the current tightness of US stocks, the weekly export report on Thu will bear watching."
The report said that based on USDA-AMS classing data, it would appear that the final ginning number will most likely be closer to 12.9 M than 13.0M bales. This is quite bulish for the commodity.
US Cotton May futures is likely to finish unear unchanged to a bit lower. May 2014 futures may trade a range of $0.91 to 0.94 on the inside or $0.905 to $0.906 on the outside, according to Louise W Rose, in Rose Report.
According to the US Department of Agriculture, stocks in US warehouses will be at a four-year low of three million bales (of 217.72 kg each) at the end of the season in July. Exports from the US is projected nearly two per cent higher at 10.7 million bales.Global stocks at the end of July are projected at around 95 million bales by the USDA.
India Cotton overview
India cotton prices remained steady on weaker export demand and demand is expected to be muted in the coming days due to finacial year ending.
Gujarat Sankar-6 cotton was traded at Rs 42,300-42,500 for a candy of 356 kg for best quality, while average grade cotton was traded on Rs 39,500-41,500 a candy. Kapas or raw cotton ruled steady as demand from ginning mills was lower.
At Rajkot, kapas traded at Rs 900-1,065 for a maund of 20 kg. Gin delivery kapas was traded at Rs 1,060-1,065 a maund.
Cotton arrivals were lower. This week, arrivals decreased to 50,000 bales in Gujarat from 55,000 last week. Similarly, across the country arrivals declined from 1.82 lakh bales to 1.52 lakh bales.
