A. Cotton
Spot price (Ex-Gin) 28.5 to29 mm
Rs/Bale Rs/Candy USD Cent/lb
22660 47400 86.59
Domestic Futures (Ex-Gin) July
Rs/Bale Rs/Candy USD Cent/lb
23340 48822 89.18
International Futures
NY ICE USD Cents/lb. ( Dec 2018) 82.29
ZCE Cotton: Yuan/MT (Jan 2019) 15790
ZCE Cotton: USD Cents/lb. 88.77
Cotlook A Index – Physical 92.90
B. Currency
USD/INR Close Previous Close
Spot 69.825 69.825
Cotton Guide
Cotton price continued to trade down. On Wednesday at IC E the cotton future for December contract ended lower at 82.29 cents per pound. The month of August has not been kind to the bulls at all. During August so far, December contract has a loss of 730 points. The other months settled from 28 to 98 points lower. Their August losses up to date range has been from 189 to 776 points.
On the trading front volume were 16,465 contracts on Wednesday and cleared previous day were 17,503 contracts. For reference December first notice day is November 26th, leaving 65 sessions until then. Dec open interest has declined every day so far this month for a total drop of 30,323 contracts to begin the session on Wednesday at 147,974 contracts. Total open interest was at 253,259 contracts, up 155 contracts, its first increase in sessions.
Wednesday was the first day of trade talks in Washington DC between officials from the US and China. The meeting is not expected to result in a resolution but it should set the stage for higher level conversations later. News on the talks was lacking. China’s ZCE futures had a 4th day of gains, and that was the first time it has scored 4 higher sessions in a row since May. Wednesday’s settlement was the highest of the last 7 sessions.
Chinese State Reserve cotton on Wednesday’s auction had a turnover rate of 56.6 percent, spinners only. Offered were 30,001.026 tons (137,795 bales); and sold were 16,951.517 tons (77,858 bales). The cumulative turnover rate is 56.74 percent (offered versus sold). This auction series started at 24.1 million bales and 15.15 million bales remain.
On the domestic front India markets were closed due to Eid celebration. However, the future market was opened for limited trading hours. The most active October future traded in the range of Rs. 23460 to Rs. 23280 and ended at Rs. 23340 per bale. Market is expected to remain lower today as the ICE future is already trading lower by 0.78% at 81.66 cents. We think the trading range for the day would be Rs. 23200 to Rs. 23440 per bale.
FX Update
Indian rupee has depreciated by 0.3% to trade near 70.02 levels against the US dollar. Rupee is pressurized by recovery in US dollar post FOMC minutes as central bank officials maintained case for interest rate hikes on back of strong economic growth. Also weighing on rupee is sharp gains in crude oil.
Brent crude trades near $74 per barrel after a 3% rally yesterday on bigger than expected decline in US crude oil stocks. Also weighing on rupee is mixed trade in equity market as market players assess US-China trade talks. Rupee may remain under pressure as Fed’s stance will support US dollar. USDINR may trade in a range of 69.85-70.15 and bias may be on the upside.