At the close of trading at the Intercontinental Exchange (ICE) Thursday, May cotton futures had settled lower six consecutive sessions as the market seemed to be correcting itself from an overbought condition. May dropped 146 points during the past two weeks, settling Thursday at 63.23 cents per pound, down 37 points on the day. In fact, May cotton had settled lower in nine of the preceding 11 sessions, having retreated from a recent high settlement of 65.55 cents on Feb. 25. December cotton settled 29 points lower at 64.74.
The latest export sales and shipment report from the U.S. Department of Agriculture, released early Thursday morning, immediately sent cotton futures lower. A half-hour later, prices reversed course and briefly traded on positive ground before selling pressure returned.
The much-anticipated report from USDA showed a net reduction of 62,500 bales in U.S. export sales in the week ended Feb. 26 for the 2014-15 marketing year following cancellations totaling 142,200 bales. China led the way, cancelling purchases totaling 118,200 bales. Indonesia also cancelled earlier purchases of 16,100 bales. The department also reported net export sales for the 2015-16 marketing year totaling 22,000 bales with Japan, Thailand and South Korea the featured buyers.
Net reductions in U.S. export sales in two of the past three weeks may be making some traders and analysts nervous. “Certainly, there must be some queasy feelings out there,” one observer said.
Export shipments for the same week set a new marketing year high at 360,800 bales, up 87 percent from the previous week and 37 percent from the four-week average. The primary destinations were China, Vietnam, Turkey, and South Korea.
Other than May cotton trading in a downward spiral lately, this week began on a positive note for other futures contracts. At the close of Monday’s ICE session, July cotton settled 12 points higher at 65.34 cents per pound, and December settled at 66.08, up 23 points. Other forward contracts settled moderately higher or unchanged.
Tuesday’s ICE session was, by far, the worst for cotton futures as contracts opened lower and remained in negative territory. Volume and selling pressure increased late in the session, and May settled at 63.63 cents per pound, down 122 points. July cotton settled 125 points lower at 64.09, and December settled at 65.12, down 96 points.
The selling pressure eased Wednesday, and futures moved back into the upper half of their daily trading ranges. May cotton settled at 63.60 cents per pound, down 3 points. July settled at 64.01, down 8 points, and December cotton was 9 points lower, settling at 65.03 cents. Throughout most of the week, a stronger dollar seemed to weigh on all commodities.
Meanwhile, the spot cotton market continued to turn quieter this week. Producers sold only 6,682 bales online in the five trading days ended March 5, down from 22,021 bales traded the previous week. Average prices received ranged from 46 to 58 cents per pound compared to 46 to 55 cents the previous week.
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