Consolidation and anticipation of USDA’s next supply and demand estimates seemed to be the primary features of this week’s cotton market. Some analysts described the market as oversold, and traders appeared to move toward the sidelines until the department releases its next balance sheet on Aug. 12. Through Aug. 1, cotton futures prices had declined eight consecutive weeks, according to one analyst.
The August supply and demand estimates will be based on the season’s first objective yield survey by USDA. Earlier this week, private estimates projected a range of 16 million to 18 million bales of U.S. production for the 2014-15 marketing year, according to another analyst, compared to 16.5 million estimated by USDA in July. Next week’s balance sheet will include a state-by-state breakdown for cotton production, and most eyes will be on Texas, “the largest and most uncertain producing state,” said one market observer. Private estimates place the state’s crop between 6.0 and 8.0 million bales.
Cotton futures at the Intercontinental Exchange (ICE) started this week on a good note as the December contract spent all of Monday’s session in positive territory and closed 97 points higher at 64.24 cents per pound. The return of speculative buyers and strong gains in other commodities appeared to support cotton’s advance as all contracts were near or above 100-point gains by the close of trading.
Monday also included the latest crop conditions report from USDA which showed little change from the previous week. The overall U.S. crop condition was rated 53 percent good to excellent for the week ended Aug. 3, down just one point from the previous week. The Texas crop was rated 38 percent good to excellent, also down one point, 65 percent of Oklahoma’s cotton crop was rated good to excellent, and the Kansas crop was at 56 percent.
Futures prices turned lower Tuesday at ICE after buying momentum faded. December, the spot month, opened one point higher then quickly moved to negative ground, settling at 63.74 cents per pound, down 50 points. Corn and soybean futures also traded lower that day.
Prices reversed course Wednesday thanks to the return of buyers to the screen with contracts trading more than 100 points higher before easing back near the end of the session. December cotton settled 61 points higher at 64.35 cents per pound. Almost all other commodities were higher, too.
Another solid U.S. export sales report provided no support for cotton during Thursday’s ICE session. For the week ended July 31, USDA reported net sales of U.S. upland cotton totaled 251,000 bales for delivery in the 2014-15 marketing year. Export shipments for the week were pegged at 145,100 bales, up 23 percent from the previous week and 42 percent from the previous four-week average.
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