West Texas cotton farmers finally got a break from May’s near-record rainfall as the month came to an end and June began, allowing many to finally begin planting their crops in earnest ahead of crop insurance deadlines. However, many cotton traders and analysts are uncertain about final planted acreage, and they may not have any answers until USDA releases its plantings report on June 30. Consequently, the market may continue to drift in a sideways pattern for a few more weeks, according to one analyst.
This week began with cotton futures turning lower as July cotton settled in the lower portion of a 146- point range at 63.75 cents per pound, down 60 points. December settled 57 points lower at 64.07 cents. Most market talk Monday was focused on planting progress as USDA reported 61 percent of the U.S. cotton crop had been planted compared to 47 percent the previous week but still well behind the five-year average of 78 percent. The department noted 46 percent of anticipated Texas acreage had been planted, up from 29 percent the previous week but well below the five-year average of 70 percent.
Cotton futures settled mixed at the close of Tuesday’s session at the Intercontinental Exchange (ICE), failing to find much support from a weaker dollar. July settled at 63.60 cents per pound, down 15 points, and December settled at 64.06, down 1 point. All other forward contracts settled with slight to moderate gains. One factor an analyst noted was the near-perfect short term weather forecast for West Texas. Overall, Tuesday’s trading was dull due to a weak demand scenario.
An absence of late-day selling enabled cotton futures to settle with sharp gains Wednesday at ICE. After beginning the session on a quiet note, the market made an impressive rally, and futures contracts settled with triple-digit gains across the board. Traders attributed the rally to a weaker dollar and rumors of U.S. cotton sold to China. July cotton settled at 65.24 cents, up 164 points, and December settled 122 points higher at 65.28 cents per pound. A declining monsoon forecast for India and unwelcome rain in parts of China also were mentioned by another trader.
Buying at ICE picked up Thursday at ICE following the release of a “good” export report from USDA; however, late day selling fueled by a recovering dollar pulled several contracts back into negative territory. July cotton settled 12 points lower at 65.12 cents per pound, and December settled unchanged at 65.28 cents.
USDA reported net sales of U.S. upland cotton totaled 106,600 bales in the week ended May 28, down 9 percent from the previous week but up 74 percent from the prior four-week average. The week’s featured buyers were Vietnam, Turkey, China, and Taiwan. Net sales for delivery in the 2015-16 marketing year totaled 53,600 bales, according to USDA, and the featured buyers were Mexico, Indonesia and Turkey. Export shipments for the week were reported at 300,500 bales, down 11 percent from the previous week and 10 percent from the four-week average. China, Vietnam and Mexico were the top three destinations.
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