Cotton futures settled lower 13 out of 14 consecutive sessions at the Intercontinental Exchange (ICE), but the losing streak came to an end in dramatic fashion on Wednesday, March 18. When the session began, May cotton briefly traded below 60.00 cents per pound but quickly turned higher as buyers returned to the screen.
Prices moved through 60.00 cents, then 61.00 and 62.00 cents on the way up as the trade seemed to notice an increase in export demand and inquiry. A weaker dollar Wednesday and talk of significantly lower cotton acreage in China this year also may have contributed to the market’s strength. May cotton settled 227 points higher at 62.48 cents per pound, and December settled at 63.67 cents, up 142 points. It was the largest rally since June 17, the session just prior to the market’s last settlement above 90.00 cents per pound, according to one analyst. In the 14 sessions leading up to Wednesday’s reversal, cotton had lost more than 600 points, according to another analyst.
Cotton continued its advance Thursday, although prices briefly fell back to negative territory before a late-session recovery. The May contract surged to a high of 63.41 cents on continued buying from the previous ICE session. The contract settled at 62.95 cents, up 47 points, while December settled 44 points higher at 64.11 cents per pound. Traders and analysts seemed impressed by cotton’s strength in the face of a higher dollar and weakness in most of the other commodity markets.
Thursday’s cotton market also may have received a boost from an impressive export sales report that exceeded most observers’ expectations. The U.S. Department of Agriculture reported sales of U.S. upland cotton totaled 238,600 bales in the week ended March 12, up noticeably from the previous week and the prior four-week average. Featured buyers were China, South Korea, Turkey, Taiwan, and Vietnam. The department also reported net sales of 50,200 bales for delivery in the 2015-16 marketing year, and the featured buyers were South Korea, Costa Rica, Taiwan, and Indonesia. Export shipments for the week totaled 296,000 bales, down 4 percent from the previous week but up 3 percent from the four-week average. The primary destinations were China, Vietnam, Turkey, South Korea, and Indonesia.
The spot cotton market also was more active in the week ended March 19 as producers sold 22,731 bales online, up considerably from the 5,966 bales sold online the previous week. Average prices received in the most recent week ranged from 49.00 to 53.00 cents per pound compared to 41.00 to 54.00 cents the previous week.
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