Cotton Daily on May 18
Daily worldwide cotton market report
May 19, 2019 (Global)
http://www.fibre2fashion.com/News/textile-news/newsdetails.aspx?news_id=72715&page=2
Last night in New York futures market, July 09 closed at 57.55 with a gain of 125 points, the October 09 closed at 59.62 with a gain of 135 points, while the December 09 closed at 60.38 with a gain of 131 points. The cotlook A index declared settled at 60.90 with a loss of 130 points today.
The spot rate of KCA moved once again towards a new high and the settlement declared at Rs. 3750/=, with an increase of Rs. 50/= today. In the domestic market today 1000 bales of Noor Pur sold at Rs. . 3800/=, 600 bales of Rahim Yar Khan sold at Rs. 3800/=, 400 bales of Haroon Abad sold at Rs. 3700/=, 500 bales of Peer Mahal sold at Rs. 3525/=, 2047 bales of Liaquat Pur sold at Rs. 3600/=, 1600 bales of Rahim Yar Khan at Rs. 3700/=.
Investor buying enthusiasm to the first USDA Supply/Demand forecast for the 09/10 marketing year shifted by mid week after the U.S. April retail sales were released on Wednesday and showed less of a decline than March, but a decline nevertheless. The The decline accelerated on Friday after news circulated that the Chinese government was preparing to release between 500,000 and 700,000 tons of cotton reserves for auction as early as next week.
The lack of any renewed U.S. export inquiry coupled with momentum extremes to the upside aided the precipitous decline on Friday. Open interest increased 7,875 contracts on the week’s trade to leave 139,150 contracts open as of Thursday’s close.
The CFTC reported that as of May 12th, funds were long 16.0% in futures only up from 15.1% long the previous week. Fund longs increased by 4,063 contracts and shorts increased by 1,313 contracts. Total fund longs now versus total 39,352 contracts shorts totaling 17,356 contracts.
U.S. cotton under lean as of May 12th was 563,241 down 346,618 bales. There were 250,865 bales under Form A and 502,974 bales under Form G.
According to IBD, industrial production fell 0.5% in April, which was the smallest decline in six months. “Actual output hit a 10-year low as capacity utilization fell to the lowest on record.” The New York manufacturing index in May rose to -4.55 from April’s -14.65 and March’s record low -38.23.
We still suggest that the general commodity price environment will be dictated by the trend in U.S. equity prices. Fund managers will continue to use the leading economic barometer to forecast the pace of the economic recovery. Stock values have soared 37% from the March 9th low to the May 8th close. The fear is that current stock valuations may be overstating companies’ abilities to generate earnings to justify the current P.E. ratios.
This concern was magnified by the weaker than expected report on retail sales last week. The bright spot over the past two quarters is that companies have slashed capital spending by the most since the 1930s and eliminated inventories for six quarters in a row, including the largest liquidation on record last quarter.
The massive reversal down last week would signal the completion of the 10-week rally. While the setback late last seek has down much to correct the heavily overbought conditions, the reversal down caps the rally and points the near term trend down. With the momentum more neutral, it would allow the cotton market to recover some of Friday’s decline without reversing the potential for a more significant correction.
The market does not seem to have the commercial support under the market to slow the sharp break which was sparked by the extreme overbought condition of the market and from ideas that China will soon release some of their strategic reserves. The general concept that cotton was undervalued compared with other commodity markets was the theme of the recent rally and fund traders were aggressive buyers in the past two months. China’s top planning body indicated that they are ready to release some of the reserves but did not give a schedule but traders believe some of the 2.72 million tonnes of cotton could begin to move on their domestic market by the end of the month.
The market pushed sharply lower on the session on Friday and July cotton moved to the lowest level since May 1st as weakness in energy and stock markets and concerns of slower demand after the recent run-up in prices helped spark the selling. Ideas that the market is overbought and a noticeable decline in weekly export sales last week helped to pressure. The new highs for the move on Tuesday with a reversal day combined with the lower close on the week could attract additional technical selling early this week.
The Commitment-of-Traders reports showed the market with a positive tilt as trend-following funds build a more significant net long position but index fund selling is aconcern for the bulls. Trend-following funds were net buyers of 4,709 contracts to build a net long of 27,150 contracts. This was in sharp contracts to index fund traders who reduced their net long position by 2,082 contracts to 56,650 contracts. The chart pattern is negative and the market does not seem to have the short-term fundamental news to slow the selling.
Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The market back below the 18-day moving average suggests the intermediate-term trend could be turning down. The market is in a bearish position with the close below the 2nd swing support number.
On May 18, on the New York Cotton Futures Exchange, the 0709 contract closed at 57.55 cents per pound, up 125 points; the 1009 contract closed at 59.62 US dollars per pound, up 135 points, while the 1209 contract rose 131 points. The closing price was $60.38/lb. The U.S. Cotton Outlook Index (cotlook A) rose 130 points to close at $60.90 per pound.
Karachi Cotton Exchange (KCA) cotton spot price reached a new high, with the price at around 3,750 rupees per bale, an increase of 50 rupees. As far as the domestic market is concerned, Noor Pur has 1,000 bales in stock at a price of 3,800 rupees per bag; Rahim Yar Khan also sells 3,800 bales and has 600 bales in stock; Haroon Abad has 400 bales of cotton at a price of 3,700 rupees; Peer Mahal has 500 bales. The price of cotton is 3525 rupees; Liaquat Pur has 2047 bales of cotton, quoted at 3600 rupees; Rahim Yar Khan has 1600 bales of cotton, priced at 3700 rupees.
Investors are actively buying cotton because after the U.S. April retail sales were announced last Wednesday, the U.S. Department of Agriculture released the cotton supply/demand report for the first quarter of 2009/10. The report showed that cotton supply was slightly lower than in March. However, the magnitude is not significant. The Chinese government is preparing to release 500,000 to 700,000 tons of cotton reserves, and auctions will begin as early as this week. This information caused cotton prices to drop sharply last Friday.
U.S. export inquiries decreased last week. Open positions in the trade contract increased by 7,875 this week, reaching 139,150 by Thursday’s close.
The Commodity Futures Trading Commission (CFTC) reported that on May 12, long contracts rose by 16.0%, while short contracts only rose by 15.1%. Long contracts increased by 4,063 hands, and short contracts increased by 1,313 hands. The current total trading volume of long contracts is 39,352 lots, while that of short contracts is 17,356 lots.
As of May 12, the U.S. cotton bullish contract closed at 563.241 and the bearish contract closed at 346.618 bales. Of which 250.865 comes from A and 502.974 comes from G.
According to investment bank data, industrial production fell by 0.5 percentage points in April, the lowest decline in the past six months. “Actual output hit a 10-year low because production capacity dropped to a low value.” The New York production index fell by 4.55 points in May, 14.65 points in April, and 38.23 points in March.
We continue to suggest that the general commodity price environment will be directly dependent on the price movement of the U.S. stock market. Fund managers will continue to use leading economic barometers to predict economic recovery. The stock price soared 37% from March 9 to May 8. The concern is that current stock market caps are inflated, generating returns that are much higher than they are now.
Last week’s retail sales data were far below forecasts, which is concerning. Over the past two quarters, companies have cut capital at levels not seen since the 1930s, slashing inventory and recording large liquidations.
After 10 consecutive weeks of gains, cotton prices reversed course last week. Although the decline at the end of last year has been reduced a lot, correcting the severely overbought condition, reversing the decline of the stock market, and pointing to a short-term downward trend. In the current situation, although the cotton market has eased from Friday’s decline, it has no potential to reverse.
The cotton market does not seem to be supported by business. The sharp slowdown in the market has broken the extreme overbought state caused by the buyer’s market, and China will release some of their strategic reserves as soon as possible. Ordinary concept cotton is undervalued compared to other commodities, and buyers have been active in purchasing in the past two months. The current situation in China indicates that it is ready to sell cotton reserves, but the schedule has not been determined. However, traders believe that 2.72 million tons of cotton will enter the domestic market before the end of the month.
The meeting that drove the sharp drop in cotton market prices was held last Friday. After cotton prices have been boosted recently, with rapid price growth and a surge in sales, the cotton July contract has been reduced to the lowest level since May 1 due to supply shortages, weak stock markets and slowing demand. Overbought cotton markets last week put pressure on declining export sales. A new high could be reached on Tuesday as there is more technical selling early in the week.
Traders Commitment Report shows the market has a positive downward trend, with bottom funding establishing a more significant net long funding, but index fund sales are a concern for the bulls. Net buyers of crowd funds purchased 4,709 lots and net long contracts of 27,150. This is a clear contract, and their net long head funds decreased by 2082 lots to 56650 lots. The chart pattern is negative and the market does not appear to be slowing sales news in the short term.
Momentum studies are trending high and low, we should act faster to break the decline. The market has fallen for 18 consecutive days, indicating that the downward trend will continue in the medium term. This is a bearish market.
Disclaimer:
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AAAOn a downtrend, bottom funding builds up a more significant net long funding, but index fund sales are a concern for the bulls. Net buyers of crowd funds purchased 4,709 lots and net long contracts of 27,150. This is a clear contract, and their net long head funds decreased by 2082 lots to 56650 lots. The chart pattern is negative and the market does not appear to be slowing sales news in the short term.
Momentum studies are trending high and low, we should act faster to break the decline. The market has fallen for 18 consecutive days, indicating that the downward trend will continue in the medium term. This is a bearish market.
Disclaimer:
Disclaimer: Some of the texts, pictures, audios, and videos of some articles published on this site are from the Internet and do not represent the views of this site. The copyrights belong to the original authors. If you find that the information reproduced on this website infringes upon your rights, please contact us and we will change or delete it as soon as possible.
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