Most believe the week's rally was based on new speculative longs entering the market, coupled with two rounds of short covering – first above 81.40 and then once above 82.40. Nevertheless, a review of open interest data cannot confirm the new position.
It was noted that the Southeast base has decreased sharply over the past week, indicating good demand for that growth. Other developments have not seen the same strength. Furthermore, there has been no notable indication of sales in any quantity to China or any other major importer. Certainly, the weekly export sales report was a big disappointment. However, that report reflected week-old data.
The market outperformed expectations and reestablished its year-old 74-88 cent trading range. Still, most think the absolute high will be 85 cents with the possibility of another test in the mid-70s. The five-cent range of 77-82 cents is projected to be the key trading range.
The market retreated more than 100 points in Friday (Dec. 8) trading on the back of the USDA's December supply demand report as it estimated world ending stocks of about 900,000 bales to rise to 82.4 million. The major bearish tone in the report came in the form of a decline of 1.6 million bales in world consumption, which has now declined to 113.73 million bales. Large decreases in demand were recorded in China (1.0 million bales less), Turkey (400,000 bales less), and Mexico and the US (100,000 bales less each). Demand remains the major hurdle in increasing cotton prices.
Furthermore, it is noted that the Chinese, U.S., Australian, Japanese, Indian and European economies are experiencing low levels of economic activity. It is believed that world consumption could fall further to 300,000 to 400,000 bales.
World production also declined by 500,000 bales from 113.5 to 113 million bales. U.S. production declined by 300,000 bales to 12.8 million. Turkish production also declined by 300,000 bales to 3.2 million. Production in Pakistan increased from 200,000 bales to 6.7 million bales.
Carryovers in major importing countries increased by 600,000 bales, while carryovers in major exporting countries saw an increase of 400,000 bales. These levels suggest that very intense price competition will continue to affect world cotton trade. The WASDE report, while reducing US carryovers to very significant levels, was seen as slightly bearish due to the availability of cotton supply chasing a declining demand market.
Preliminary U.S. projected acreage estimates for 2024 range from 9.8 to 10.8 million acres. Certainly, growers with good yields in 2023 will plant a little more in 2024 or so, with total plantings expected to be between 10.1 and 10.3 million acres.
Source: Cotton Growers
Regards
Team Sis
Any query plz call 9111977771
https://wa.me/919111977775
