Cotton futures at the Intercontinental Exchange (ICE) broke out of a three week trading range this week. A possible combination of fresh export demand and speculative short covering, along with concerns about crop conditions in the southern Texas High Plains, may have provided the market a boost on Wednesday, according to one analyst.
The December contract led a quick move higher Wednesday on active buying, and all contracts posted triple-digit gains at the close of trading. December settled 165 points higher at 65.81 cents per pound as cotton seemed to ignore weakness in the grain and oilseed markets. Estimated volume at ICE was 21,600 lots, the highest since Aug. 1 and more than double the previous session’s volume.
This week began on a less than encouraging note as cotton futures spent most of Monday’s session in negative territory on limited volume and a lack of any fresh news. December cotton settled at 63.84 cents, down 51 points, and it was the third consecutive lower settlement for the contract. Traders seemed unconcerned about a decline in overall U.S. crop conditions.
The percentage of the crop rated good to excellent slipped from 52 percent the previous week to 50 percent in the week ended Aug. 17, according to USDA’s National Agricultural Statistics Service (NASS). The portion of the crop rated fair was unchanged at 34 percent, but 16 percent was rated poor to very poor, up 2 points. The Texas crop was rated 35 percent as good to excellent, down 2 points from the previous week. In Oklahoma, 60 percent of the crop was good to excellent, and 58 percent of the Kansas crop was in the same category.
The breakout for cotton prices began with Tuesday’s ICE session as the lead month spent the entire day trading above the previous day’s settlement. At the close of trading, December was at 64.16 cents, up 32 points. All other contracts also posted gains in a rather quiet session with an estimated volume of 10,160 contracts.
Following Wednesday’s surge in the cotton market, buying faded at ICE, and prices settled mixed Thursday. Cotton futures opened higher and moved to moderate gains by midmorning. The December contract advanced as high as 66.67 cents per pound, up 86 points, before retreating and settling at 65.92, up 11 points.
Meanwhile, the latest export report was released by USDA Thursday morning. It showed net upland sales of U.S. cotton in the week ended Aug. 14 totaled 155,600 bales with China, Turkey and Indonesia the featured buyers. Export shipments that week totaled 105,700 bales, and the primary destinations were Mexico, Turkey, Vietnam, and China.
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