Cotton futures prices settled lower for the third consecutive session Thursday as improving weather conditions across most of the U.S. Cotton Belt seemed to weigh on the market. Clear and drier conditions should allow the U.S. harvest to expand quickly. Other negative factors mentioned by traders and analysts included a lack of demand from textile mills.
Prices at the Intercontinental Exchange (ICE) were higher for most of Thursday’s session, trading in a narrow range until volatility moved in and forced them moderately lower. December cotton settled 15 points lower at 63.56 cents per pound after trading as high as 64.19 cents. Cotton news was limited.
This week began on a positive note at ICE as futures contracts were higher throughout Monday’s trading session. Buying may have been spurred by strong gains in the grains and oilseed futures markets, higher Chinese cotton prices, and a weaker dollar. Otherwise, cotton market news was rather featureless. The December futures contract settled at 65.02 cents, up 92 points. Other contracts also posted moderate gains.
Prices fell sharply the following day without warning, according to one analyst, as selling returned to the cotton market despite advances in other commodity prices. Initially, December cotton moved through the previous session’s high of 65.41 cents per pound before it stalled and quickly turned negative. The contract finally settled at 64.16, down 86 points. The most notable news Tuesday may have been contained in the latest U.S. Crop Progress and Condition report.
USDA reported 22 percent of the U.S. cotton crop had been harvested, up from 15 percent the previous week and near the five-year average of 24 percent. Texas producers, mostly in south and central regions, had harvested 20 percent of the state’s anticipated crop compared to the five-year average of 21 percent. Meanwhile, harvest in Oklahoma and Kansas was just getting underway. The department added that bolls were open on 77 percent of U.S. acreage, up from 73 percent the previous week but well below the five-year average of 85 percent.
The retreat continued Wednesday as futures contracts spent most of the session in negative territory. December cotton traded as low as 63.29 cents in a 117- point range before climbing back to settle at 63.71 cents per pound, down 45 points. It was the contract’s lowest settlement since Oct. 3. Other contracts posted similar losses. One observer noted disappointing news regarding consumer spending with clothing sales down 1.2 percent, the largest monthly decline in almost two years.
More disappointing news came with USDA’s export sales and shipment report for the week ended Oct. 9. The department reported export sales of U.S. upland cotton totaled a paltry 7,000 bales, down 90 percent from the previous week and 95 percent from the four-week average. Taiwan and Turkey were the featured buyers for the week. Export shipments fell to a marketing year low of 65,900 bales with Mexico, Turkey and Indonesia the top three destinations.
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