COTCO Company updated Sales – Export of US cotton this week with the following market news:
ICE cotton futures rose more than 3% on Friday despite a stronger US dollar as strong weekly export sales reports boosted investor sentiment.
- ICE May: closes at 84.90 c/lb, up 274 points;
- ICE July: closed 85.08 c/lb, up 245 points.
Despite ongoing US and world economic concerns, much-awaited data has been released, surprisingly supportive of the upside.
1.The weekly export sales report: ended on February 16 by the US Department of Agriculture showed a high increase. A total of 425,300 bales of Upland were sold for 2022/23 and 11,900 bales for 2023/24, with 16 countries buying cotton during the week, indicating strong demand. The largest buyer was Vietnam, ordering 131,200 bales, followed by Pakistan 95,600 bales, Turkey 79,600 bales, China 46,200 bales and Indonesia 19,200 bales. Export shipments increased slightly from the previous week, with 193,600 bales exported.
- Report of the American agricultural forum on February 24:
– U.S. cotton acreage in 2023 is forecast by USDA at 10.9 million acres, 21% lower than 2022’s 13.8 million acres. This was a surprise that strongly supported the cotton market;
– U.S. 2023 production is projected at 15.8 million bales while realized output is pegged at 4 million bales, a very neutral figure;
– U.S. exports in 2023 are expected to rise to 13.8 million bales on expectations of increased demand and an improving global economy;
– U.S. consumption in 2023 is expected to grow 4.4% to 115.5 million bales, recovering from declines in MY 2022/23;
– Global ending stocks are expected to decline slightly to 88.6 million bales.
Keeping gains in check, the US dollar = USD index rose 0.6% to a near two-month high against rivals on news that the Fed will likely keep interest rates higher for the long term.
Medium and long-term forecast:
- As China reopens and a gradual economic recovery is forecasted, optimism grows, and markets are seeing that materialize in the most recent six USDA export sales reports, China rising purchase of raw materials.
- China’s reopening is also very active in the global fight to tackle rising inflation. This is positive in ensuring supply chains run more efficiently in the medium to long term.
- Europe (the euro area) and the UK experienced a return to growth thanks to a sharp drop in energy prices, in addition, a not-so-cold winter helped reduce energy demand, keeping gasoline prices low.
- The CFTC’s resumption of regular weekly On-call contract reports has inspired confidence in long-term buys (Previous CFTC site affected by cyber attack)
ICE May cotton futures forecast has a chart low at 80.73 – 81.98 and a market high at 89.31 – 91.11.
The updated USDA statements are as follows:
On call Contract (New York)
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