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Cotton Market Weekly(01/05/2015)

The cotton market closed out the month of April on a strong note, buoyed by another positive export sales and shipment report, firm cotton prices in India, and a weaker dollar. In fact, cotton futures ended the month with almost a 4.50-cent gain.

July cotton was higher for the third consecutive session and five of the last six at the close of trading Thursday at the Intercontinental Exchange (ICE). It was July’s best performance since September of last year. The contract settled at 67.88 cents per pound, up 79 points, after trading as high as 68.07 cents during an active session. December cotton traded in the plus column most of the day and settled in the top half of a 66-point range at 66.64 cents, up 37 points.

Thursday began with the release of USDA’s latest export sales and shipment report which showed net sales of U.S. upland cotton totaled 124,200 bales in the week ended April 23. The sales volume was down 14 percent from the previous week but up significantly from the four-week average. The featured buyers were Vietnam, China, South Korea, and Turkey. The department also reported net sales of 42,900 bales for delivery in the 2015-16 marketing year, primarily for Mexico, China and Japan.

USDA also reported export shipments in the most recent week totaled 285,300 bales, down 12 percent from the previous week and 11 percent from the four-week average. The primary destinations were China, Vietnam, Turkey, Indonesia, and Mexico. According to one market analyst, U.S. export commitments now total 10.84 million bales, and shipments only need to average approximately 220,000 bales per week for the remainder of the marketing year to reach USDA’s current estimate of 10.7 million bales.

This week began with cotton futures surging early during Monday’s ICE session before pulling back. May and July cotton settled with 11-point losses, settling at 66.39 and 66.23 cents per pound, respectively. October settled 15 points higher at 65.76 cents, and December settled 1 point higher at 65.63 cents per pound. All other forward months settled with modest losses.

Cotton futures resumed their advance Tuesday and settled with moderate gains. July cotton traded above 67.00 cents before settling 16 points higher at 66.39 cents. December traded as high as 66.13 cents and settled at 65.85, up 22 points. One market observer thought the market had moved into a consolidation phase.

Wednesday was an even better day for cotton futures at ICE. July ended the session 70 points higher at 67.09 cents per pound, and December was 42 points higher at 66.27 cents. Other contracts posted more modest gains at the close of trading.

In other news, rain moved out of the Delta region as this week was coming to an end, and the prospect for sunny and warm weather was welcome. In fact, the National Weather Service was forecasting several consecutive days of clear skies, enabling growers in the Delta to resume field work which is behind schedule. Some fields with standing water could take additional time to dry enough to support farm equipment.

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