Cotton futures prices began this week by reversing course and settling modestly higher Monday at the Intercontinental Exchange (ICE). During the two previous ICE sessions, December cotton had lost 216 points and moved to new contract lows and new contract low settlements.
Monday’s action began with cotton futures in the red where they remained for most of the morning before buyers returned and raised December to positive ground for the final two hours of trading. The contract traded in an 82-point range and settled at 60.79, up 24 points. One analyst said it appeared the cotton market was consolidating following last Friday’s sell off.
Price pressure returned Tuesday, and December cotton traded below 60.00 cents per pound for the first time in the contract’s history. December started the session lower at 60.45 cents, but sellers returned and forced the contract to a low of 59.86 cents before it settled at 60.00 cents, down 79 points. March cotton settled 74 points lower at 59.89 cents per pound. Cotton was not alone Tuesday as most exchange traded commodities also were under pressure. Some traders and analysts noted rain in parts of India’s northern cotton regions.
Global economic concerns sent cotton futures lower again on Wednesday, and December cotton settled below 60.00 cents. The contract opened lower and immediately began losing more ground, trading as low as 59.78 cents per pound. December eventually settled 3 points lower at 59.97 cents, marking the fourth consecutive ICE session the contract reached a new life of contract low and life of contract settlement low.
One analyst reported China’s preliminary Purchasing Managers’ Index (PMI) for September came in at 47.0, indicating a contraction of the country’s economy that has been suspected by market observers. The analyst noted the PMI has been below 50.0 since March.
Thursday’s ICE session was a much different story as cotton futures posted their best gains in 13 sessions, according to one observer. December traded near unchanged for most of the morning, but selling pressure moved in and forced the contract to a new low of 59.70 cents. However, buyers returned late in the session and lifted it back up. December finally settled 34 points higher at 60.31 cents per pound. A combination of a decent export sales report and weaker U.S. dollar may have provided support.
The weekly export sales and shipment report from the U.S. Department of Agriculture was about as expected by most traders and analysts. The department reported net export sales of U.S. upland cotton in the week ended Sept. 17 totaled 90,800 bales, down 6 percent from the previous week but up 18 percent from the four-week average. The featured buyers were Vietnam, Mexico and Turkey. The week’s export shipments totaled 109,300 bales, up 84 percent from the previous week but down 3 percent from the four-week average. Mexico, Indonesia, Vietnam, and South Korea were the top four destinations.
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