Cotton prices at the Intercontinental Exchange (ICE) broke a three-session losing streak Wednesday after starting the day lower until buying returned around mid-morning in New York. December futures tested ground above 66.00 cents per pound for a while before settling at 65.96 cents, up 65 points. A feature mentioned by some traders and analysts this week has been December’s premium over March futures which, they believe, reflects anticipated tight supplies through the U.S. harvest season.
Overall, the cotton market seems to be in a holding pattern, lacking any clear direction from a fundamental standpoint. Weather developments in the world’s cotton producing countries and an announcement from China regarding its cotton subsidy policy may be the first factors to provide the market with some direction.
Thursday’s ICE session reversed direction in a rather lackluster manner. Estimated volume was just 9,569 contracts, slightly more than half of Wednesday’s cleared volume of 18,183 contracts. Selling dominated the day and sent futures prices lower by mid-morning with December cotton returning to its familiar 65.00- to 66.00-cent range. The contract settled at 65.45 cents per pound, down 51 points. One market observer noted an advance in the U.S. dollar index may have provided some pressure on cotton prices. Another observer seemed to think traders may be waiting for USDA’s monthly supply and demand estimates next week.
This week began on Tuesday following the Labor Day Holiday with most futures contracts suffering triple-digit losses. December cotton moved to as low as 65.05 cents before regaining some ground and settling at 65.31, down 126 points. The strengthening dollar, lower futures prices in China, and improved weather in India and parts of the U.S. Cotton Belt were attributed by one analyst to explain the market’s weakness that day.
In other news, export sales of U.S. upland cotton totaled 82,900 bales for the week ended Aug. 28, according to USDA. The featured buyers were Turkey, South Korea and Indonesia. Export shipments that week totaled 104,200 bales, and the top three destinations were Turkey, China and Mexico.
Meanwhile, rain and storm chances were in the forecast for this weekend in West Texas. Some dryland fields in the region may benefit from any precipitation. Harvest in South Texas continued to advance this week, although scattered showers could delay progress in some parts of the Coastal Bend this weekend.
Dry and hot conditions were reported in the Delta states late this week ahead of expected cooler temperatures and a chance of rain. According to one report, more cotton fields in Arkansas were reaching the cut-out stage, and boll opening was increasing in some areas. Defoliation is expected to begin in the northeast portion of the state in the next two weeks.