By The cotton market ended the year with a bit of a whimper as futures contracts at the Intercontinental Exchange (ICE) traded on either side of unchanged Tuesday. March cotton settled two points lower at 84.64 cents per pound while all other contracts posted slight to moderate gains. Ahead of the settlement period, March traded as high as 85.29 cents before stalling as fresh selling pushed it lower. Volume was a "respectable" 14,621 contracts.
Despite the lackluster performance on the final day of the year, 2013 was a good year for cotton. On the same day in 2012, the March 2013 futures contract settled at 75.14 cents per pound, thus cotton was one of the top commodity markets this past year with a gain of 12.6 percent, according to one analyst. By comparison, corn lost 39 percent on the year which seemed to initiate whispers of increased U.S. cotton acreage this year.
Residual selling seemed to carry over into Thursday's ICE session, pressuring the March contract to a low of 83.50 cents before gaining support that lifted it to 85.07 until a wave of selling hit the screen. The contract eventually settled at 84.04 cents per pound, down 60 points. May cotton settled 38 points lower at 84.02, and July was unchanged while forward months posted modest gains. One analyst found it difficult to identify a reason for Thursday's price swings while another said it was possible that weakness in soybeans and wheat may have spilled over into the cotton market.
Tuesday's and Thursday's ICE sessions were in sharp contract to the previous two trading days. March cotton settled 123 points higher on Dec. 27 and gained another 54 points on Dec. 30 despite relatively quiet activity. After the close of trading on Dec. 27, a cotton market newsletter noted March cotton settled at its highest level since Oct. 21 when it reached 84.25 cents per pound.
Meanwhile, the end-of-year holidays, along with higher prices may have kept a lid on U.S. export business. The U.S. Department of Agriculture reported net upland sales of 85,900 bales in the week ended Dec. 26, down 61 percent from the previous week and the prior four-week average. The top four customers were China, Bangladesh, Turkey and Mexico. Export shipments for the same period totaled 143,200 bales, and the primary destinations were Turkey, China, Indonesia, and Vietnam.
Export sales commitments now total almost 7.7 million bales or 67 percent of USDA's current estimate. Weekly sales will need to average 119,624 bales to reach the department's estimate by the end of the marketing year on July 31. Actual export shipments now total just over 3.06 million bales, and weekly shipments will need to average almost 237,000 bales.
The spot cotton market remains quite active as producers sold 57,841 bales online in the week ended Jan. 2, more than double the previous week's volume. Average prices received by producers ranged from 76 to 77 cents per pound compared to the previous week's range of 76 to 79 cents.
In other news, traders and analysts continue to talk about China and its possible plan to change its cotton price support system. The Asian giant began buying domestic cotton in 2011 as weak prices affected local farmers' ability to sell their crops. The stockpiling policy has resulted in a domestic supply of 57.4 million bales, according to one report. Much talk has centered on a possible change to direct payments to cotton farmers to replace stockpiling for the strategic reserve system.
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