The Bounce Back
Cotton futures are picking up the pieces on Monday morning, trading higher by as much as 140 points after enduring a week of losses that drove prices to their lowest since February 1. The market suffered a blow, down 69 to 94 cents, particularly impacted by the downward trend of new crop futures. Dec wrapped up the week with a net loss of 134 points. In contrast, May saw a more significant dent, losing 513 points throughout the week and dropping 17.15 cents from the contract high registered in February.
Trader Sentiment
Speculative traders on the cotton market displayed a notable decrease in net long positions by 3.9k contracts following a period of substantial long liquidation. As per the CoT report, this group now holds 80.6k contracts net long. On the flip side, commercial cotton traders were seen entering fresh hedges; however, these new shorts managed to offset the impact of the added longs, resulting in a swing of 4k contracts and a net short position of 127.6k contracts as of 4/2.
Market Insights
In USDA’s weekly cotton market review, 4.7k bales were sold over the week at an average price of 83.09 cents per pound. Meanwhile, the Cotlook A Index took a step back, dropping by 235 points to reach 95.60 cents per pound on 3/28. The AWP weakened further by 140 points, settling at 69.48. ICE certified stocks witnessed a 14k bales increase, reaching 81,664 bales as of 4/1.
Despite the setbacks, May 24 Cotton closed at 86.25, down by 89 points but currently showing an increase of 83 points. On the other hand, Jul 24 Cotton ended at 87.82, down 75 points, yet presently up by 84 points. Dec 24 Cotton closed at 82.65, marking a decrease of 87 points, but currently showing a recovery of 11 points.
On the publication date, Alan Brugler had no direct or indirect positions in any of the securities mentioned in this article. All information and data presented here are purely for informational purposes. For more details, please refer to the Barchart Disclosure Policy.
The perspectives and opinions articulated here are solely those of the author and may not necessarily align with those of Nasdaq, Inc.
