Cotton futures prices meandered this week with little fundamental news to provide any direction. Most sessions at the Intercontinental Exchange (ICE) in New York were characterized by two-sided trading as consolidation continued.
The most significant news this week may have been the announcement by the Federal Reserve that interest rates will remain unchanged due to “global economic concerns.” The word global seemed to capture the attention of some cotton traders and analysts who noted they had never seen the Fed use that term to explain or justify its actions. One analyst noted the cotton market has been influenced by global economic concerns in recent weeks, and the word global could be interpreted to mean China.
This week began with cotton futures trading higher at ICE Monday before they reversed course and settled lower as sellers returned to the screen. December cotton traded as high as 63.70 cents per pound before falling and ending the session at the bottom of a 127-point range. The contract settled at 62.55 cents, down 58 points. All other futures contracts settled with similar losses.
December traded in a much narrower range Tuesday and settled at 62.52 cents, down 3 points, after trading on positive ground for much of the session. Forward contracts settled with single-digit gains. One analyst noted little activity in the cash cotton market, possibly due to the late start to the U.S. cotton harvest and producers’ reluctance to sell at this time.
December and March cotton futures contracts were the only winners at the end of Wednesday’s ICE session. The day began rather quietly, but activity increased during the final five hours of trading as December traded in a 64-point range. The contract settled 19 points higher at 62.71 cents, and March settled 3 points higher at 62.42 cents.
In another example of two-sided trading, cotton futures started lower Thursday but posted moderate gains as December reached its daily high of 63.21 cents per pound during the session. However, the contract could not sustain the gain and returned to negative ground for the final four hours of trading. The contract settled 31 points lower at 62.40 cents.
A better-than-expected export sales report appeared to have little influence on the futures market Thursday. USDA reported net sales of U.S. upland cotton totaled 96,600 bales in the week ended Sept. 10, up 16 percent from the previous week and 46 percent from the four-week average. The featured buyers were Vietnam, Mexico, Turkey, and Indonesia. The department also reported export sales of 14,500 bales for delivery in the 2016-17 marketing year. Export shipments last week totaled 59,400 bales, up 57 percent from the previous week and 53 percent from the four-week average. The primary destinations were Mexico, South Korea, Thailand, and Indonesia.
In the spot cotton market, producers sold 5,555 bales online in the week ended Sept. 17, up from 1,405 bales sold online the previous week. Average prices received ranged from 57 to 60 cents per pound this week.
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