When it finally appeared the cotton market was about to change direction, a new round of selling sent futures prices sharply lower Thursday despite another solid export sales and shipment report. Futures contracts were unchanged in early trading but moved lower later in the session. December cotton traded in a 258 point range before settling at 66.05 cents per pound, down 203 points.
“What will it take to finally halt the market’s decline?” one market observer asked. “In other words, at what level will sellers refuse to chase the market lower, and when will buyers show up in greater numbers?” Another observer said, “Cotton traders, even some of the more bearish lot, seemed surprised by the degree of today’s weakness. It will be interesting to see how much further the bears might be able to push this market against the increasing demand these lower prices seem to be generating.”
The demand he referred to was evidenced by USDA’s export report for the week ended July 17 which showed net sales of U.S. upland cotton for delivery in the 2014-15 marketing year totaled 371,400 bales. Turkey, Vietnam and China were the featured buyers. According to one market analyst, “Turkey has purchased 393,300 bales, approximately 43 percent of the total of 917,400 bales sold in the past three weeks. Turkey now has 908,200 bales secured for next marketing year plus 85,500 not yet shipped from the current marketing year.” Export shipments for the week, at 72,000 bales, were down 12 percent from the previous week and 44 percent from the four-week average. The primary destinations were Mexico, China and Turkey.
Cotton found little momentum in either direction as this week began. December traded in a 74 point range Monday at the Intercontinental Exchange (ICE) before settling at 67.69 cents, down 5 points. From a technical standpoint, cotton prices continued to consolidate in an attempt to work off some of its oversold condition.
Prices enjoyed a respite Tuesday from the string of single-digit settlements as the December contract traded as high as 68.54 cents per pound, its highest since July 16, before moving lower and settling at 67.91, up 22 points. Support may have come from references to increased export sales as well as improved cotton prices on China’s cotton exchange.
December cotton traded as high as 68.40 cents per pound during Wednesday’s ICE session and managed to settle above the 68-cent level for the first time since July 14 at 68.08, up 17 points. It was another quiet session, and volume was estimated at just 8,900 contracts. Despite the higher settlement, one analyst noted “bearish views seem favored amid continued good crop development in the United States and elsewhere.”
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