A Cotton prices made a rare move to positive ground at the start of this week as traders noted continued export inquiry and stronger prices for corn and soybeans. Contracts at the Intercontinental Exchange (ICE) were higher for most of Monday’s session, and December cotton settled 53 points higher at 65.88 cents per pound. Other contracts also posted modest gains; however, the market’s overall bearish sentiment returned the following day.
Cotton prices at ICE spent most of Tuesday’s session on the defensive as they moved steadily lower throughout the day. December cotton gave up Monday’s gains and then some, eventually settling at 65.01 cents, down 87 points. In fact, December traded as low as 64.60 cents per pound before the close of trading. Weaker grain and oilseed prices and improved crop conditions seemed to weigh on the cotton market. Another factor may have been early morning showers in the Lubbock area Tuesday.
USDA reported 54 percent of the U.S. cotton crop was rated good to excellent for the week ended July 27, up two points from the previous week and well above the 45 percent rating at the same time last year. The Texas crop was rated 39 percent good to excellent, Oklahoma was at 59 percent good to excellent, and Kansas was rated at 56 percent. Traders and analysts continue to talk about the U.S. crop potential with private estimates ranging from 16.5 million to 17.5 million bales.
With little fresh news to go on, cotton prices continued to decline Wednesday after starting with slight gains at ICE. It appeared speculative selling was weighing on the market throughout most of the session as December slipped to 63.76 cents before clawing its way back and settling at 64.00 cents per pound, down 101 points. According to one analyst, the meager hand-to-mouth mill buying at present is not enough to support the cotton market.
On Thursday, December cotton dropped to a new low of 62.32 cents before settling down 113 points at 62.87 cents, the lowest close since October 2009. One analyst said, “This is a classic bear market, responding to pure and simple supply and demand.”
In its next-to-last export report for the 2013-14 marketing year, USDA reported net upland sales of U.S. cotton totaled only 5,700 bales for the week ended July 24. Malaysia was the featured buyer. However, net sales for delivery in the 2014-15 marketing remained strong at 254,400 bales with China, Pakistan and Vietnam the featured buyers. Export shipments for the week totaled 118,400 bales, up 64 percent from the previous week and 3 percent from the four-week average. The primary destinations were Mexico, Indonesia, China, Turkey, and Vietnam.
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