The cotton market began this week on a strong note as futures resumed their upward movement, possibly aided by a weaker dollar on Monday and continued talk about a significant cut in China’s cotton acreage this year. Following Monday’s session at the Intercontinental Exchange (ICE), the market appeared to enter a consolidation phase, and futures contracts mostly settled mixed for three consecutive session.
May cotton traded Monday at its highest level since March 3 and settled at 64.05 cents per pound, up 123 points. July cotton also settled with a triple-digit gain at 64.42 cents, up 102 points, and December settled 49 points higher at 64.55 cents. In addition to the dollar and news about China, traders were talking about reports of serious crop damage from hail and high winds in Australia; however, later reports confirmed the damage was limited to an isolated area.
Mid-morning gains on Tuesday turned to modest losses in a two-sided affair at ICE as buying subsided, and the dollar gained strength. The May and July futures contracts posted losses of 14 and 4 points, respectively, at the close of trading. December cotton settled 15 points higher at 64.70 cents per pound. All other forward months also posted moderate gains. Talk among traders and analysts also turned to next week’s planting intentions report from USDA.
Momentum slowed and trading volume at ICE declined Wednesday as cotton appeared to ignore a weaker dollar. On the fundamental front, USDA released its monthly ginnings report which showed 16.3 million bales had been ginned for the 2014-15 marketing year, up from the 16.08 million bales estimated in the department’s latest supply and demand report. May cotton settled at 63.16 cents, down 75 points, and December settled at 64.29, down 41 points. Observers also were talking Wednesday about the next export report from USDA and expectations for another impressive sales total.
USDA released the report early Thursday which showed net sales of U.S. upland cotton totaled 177,600 bales in the week ended March 19, down 26 percent from the previous week but up noticeably from the four-week average. The featured buyers were China, Turkey and Mexico. The department also reported net sales of 21,000 bales for delivery in the 2015-16 season, and Turkey, South Korea, Mexico, and Vietnam were the top buyers. Export shipments in the week ended March 19 totaled 290,300 bales, down 2 percent from the previous week but unchanged from the four-week average. The primary destinations were China, Vietnam, Turkey, Indonesia, and South Korea.
The report offered little support to the cotton market Thursday as futures settled mixed. May was down 8 points at 63.08 cents per pound at the close of trading. July and October also posted modest losses; however, December cotton settled at 64.33 cents, up 4 points. Once again, a stronger dollar seemed to weigh on the market.
The spot market remained steady as producers sold 27,570 bales online in the week ended March 26 compared to sales of 22,731 bales the previous week. Average prices received ranged from 53 to 58 cents per pound versus 49 to 53 cents the previous week.
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