Cotton futures surged higher four out of five consecutive sessions at the Intercontinental Exchange (ICE) with May cotton gaining 253 points and December gaining 142 points during the run. Tight supplies and speculative buying were credited with giving the market much of its strength.
The rally began last Thursday, April 2, as the May contract settled 111 points higher at 63.69 cents per pound on modest volume at ICE. December settled at 64.54 cents, up 63 points. Friday was a market holiday, but cotton resumed its upward momentum Monday despite weakness in corn and soybean futures and a slightly stronger dollar. May settled at 65.34 cents, up 165 points, and December was 38 points higher at 64.92. May’s settlement was its first above the 65.00-cent level since Feb. 26. As May moved through the 200-day moving average, it appeared to touch off a round of buy stops.
Cotton futures opened on positive ground Tuesday, and as they worked higher, buying increased and prices shot even higher as May broke through another key resistance area at 66.00 cents per pound. The contract eventually settled at 66.42 cents, up 108 points, and December settled 72 points higher at 65.64 cents per pound. During the session, May traded at its highest level in almost seven months. The only fundamental news on the day was reports of widespread rain in Australia’s major cotton growing regions the previous weekend. The crop there is in the open boll stage, and the rain was not welcome.
The rally continued Wednesday as May cotton topped 67.00 cents during the ICE session and settled at a fresh five-month high of 66.73, up 31 points. Steady buying, increasing open interest, and a lack of selling were noted by market newsletters and analysts. December cotton settled 33 points higher at 65.97 cents per pound. Volume at ICE was robust at an estimated 57,600 contracts, the highest since Feb. 10.
The cotton market took a break Thursday as futures moved back and forth before ending the session on modest losses. Estimated volume again was strong at an estimated 55,800 contracts. May cotton settled 51 points lower at 66.22 cents, and December settled at 65.96, down 1 point. Two reports from the U.S. Department of Agriculture were released during Thursday’s ICE session.
The first was the departments weekly export sales and shipment report which showed net sales of U.S. upland cotton totaled 45,700 bales in the week ended April 2. The volume was down 25 percent from the previous week and 64 percent from the four-week average. Turkey and China were the featured buyers. Net sales of 16,500 bales for delivery in the 2015-16 marketing year also were reported, and the featured buyers were Mexico, India and Turkey. Export shipments for the week reached a marketing year high of 433,800 bales, up 33 percent from the previous week and 42 percent from the four-week average. The primary destinations were China, Vietnam, Turkey, Indonesia, and South Korea.
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