Cotton futures at the Intercontinental Exchange (ICE) in New York ended a three-session losing streak Wednesday, although prices remained within their long standing trading range and without any material follow through. December cotton bottomed out at 63.94 cents per pound during the session, its lowest since June 23, before buyers returned and lifted the contract higher. The contract traded almost up to 65.00 cents before settling at 64.54, up 30 points. All other 2016 futures contracts ended the session with slight to modest gains.
This week began with cotton and other commodities on the defensive as selling pressure increased. Cotton spent most of Monday’s ICE session lower, and the December contract continued to retreat to its lowest level in more than three weeks. Analysts pointed to a stronger dollar that day along with general weakness in the rest of the commodity sector. Soybeans, corn and wheat suffered with one market observer attributing the weakness to favorable U.S. weather conditions. Cotton’s losses Monday were meager compared to the other crops with December cotton settling 55 points lower at 64.67 cents per pound.
The latest U.S. Crop Conditions report, released by USDA after the close of Monday’s ICE session, showed the cotton crop was unchanged from the previous week with 57 percent rated good to excellent and 35 percent rated fair. The crop in Texas was rated 50 percent good to excellent, and Georgia’s crop was rated 66 percent in the good to excellent category. The states with the lowest condition ratings were Missouri and South Carolina.
Tuesday’s market was much the same as December cotton remained in negative territory for the majority of the ICE session while trading in a narrow 80-point range. The contract settled 43 points lower at 64.24 cents per pound. Volume at ICE was light as less than 14,000 contracts changed hands. Tepid demand along with the favorable crop conditions seemed to encourage sellers.
Wednesday’s return to positive territory for cotton futures carried over into Thursday’s ICE session, getting an initial boost from a better than expected export sales and shipment report. Released by USDA early Thursday, cotton futures advanced, and December traded as high as 65.28 cents per pound before light selling pressure returned late in the session. The contract settled at 64.74 cents, up 20 points.
The export report showed net upland sales of U.S. cotton for the week ended July 16 totaled 91,500 bales for the 2014-15 marketing year, up 79 percent from the previous week and 64 percent from the four-week average. Featured buyers were Vietnam, South Korea, Turkey, and China. Net sales for delivery in the 2015-16 marketing year totaled 45,500 bales, primarily for Mexico, Thailand and El Salvador. Export shipments that week totaled 173,400 bales, up 27 percent from the previous week but down 9 percent from the four-week average. The primary destinations were Turkey, China, Vietnam, Mexico, and Indonesia.
Meanwhile, mostly clear skies and warm temperatures were in place on the Texas plains late this week, providing much-needed heat units to the region’s cotton crop that is slightly behind schedule. Reports indicate cotton is maturing under the current weather conditions, and growers continue to monitor their fields for insect pressure.
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