The cotton market proved vulnerable Friday. Cotton futures were under pressure through the trading session and ended lower. ICE May had the largest losses, down 26 points at close to 62.97 cents. Deferred July contract sagged 12 points to 63.37 cents/lb. Over the week, May contract dropped 2.16 cents and July contract skidded 1.85 cents.
Graphically, the May contract was pulled further away from its 20-day moving average support, extending the downward trend. Based on Fibonacci analysis, it broke through the 38% retracement objective at 62.95 cents. The next support may find at 50% retracement objective around 62 cents.
Fundamentally, today’s surge in the US currency posted a negative impact on cotton futures as well as on majority of commodity markets. US dollar index soared following today’s US job report which holds the bright prospects for the US economy. In addition, the sharp setback in the US stock market weighed on the cotton market.
USDA will issue its March WASDE Tuesday, Mar. 10. Pre-release DowJones estimates for U.S. ending stocks average 4.2 million bales, unchanged from February. The private estimates range from as low as 4.0 million to as high as 4.3 million.
In other news, US Census Bureau reported that US all cotton exports in January were 245.3 million kilograms. If converted to 480-pound bales, they were 1.126 million. That was up 9.85% from the previous month but down 20.5% year-over-year.
China Zhengzhou may cotton gained 0.17 cents to settle at 95.47 cents, and Sep cotton rose 0.2 cents to 98.3 cents/lb.