Cotton futures turned sharply lower in the final trading session of 2014 at the Intercontinental Exchange (ICE) Wednesday as speculative selling weighed on all contracts. March cotton traded as low as 60.22 cents per pound and ended the session near the bottom of a 186-point range, settling at 60.27, down 171 points. All forward contracts also settled with triple-digit losses. The sudden and dramatic downturn was preceded by mostly quiet, holiday-influenced trading at ICE.
This week began with cotton futures trading on either side of unchanged for most of Monday's session before a late move higher. March traded up to 62.29 cents per pound before pulling back and settling at 62.01, up 38 points. The modest rally may have been prompted by a strong export sales report from the U.S. Department of Agriculture that was delayed until Monday morning due to the Christmas holiday.
The department reported net export sales of U.S. upland cotton totaled 314,300 bales in the week ended Dec. 18, a marketing year high. China accounted for almost 50 percent of the purchases, and Vietnam accounted for 25 percent. Shipments that week totaled 202,500 bales. It appeared most traders were surprised by the export sales volume.
March cotton again traded on either side of unchanged during Tuesday's ICE session before settling 3 points lower at 61.98 cents per pound. All other futures contracts settled with modest, double-digit gains as the market was void of any significant news other than continued delays in completing the Texas harvest. One analyst seemed to think the market had reached equilibrium.
The export sales and shipment report for the week ended Dec. 25 was released by USDA Friday morning, Jan. 2. It showed net sales of U.S. upland cotton at 89,400 bales, down 72 percent from the previous week and 54 percent from the four-week average. Vietnam and China again were the featured buyers. Export shipments for the week totaled 169,600 bales, down 16 percent from the previous week but unchanged from the four-week average. China, Turkey and Vietnam were the primary destinations.
From an export sales standpoint, Turkey has been mostly absent in the last two weekly reports from USDA. According to one newsletter, Turkish mills remain concerned about their government's anti- dumping investigation of U.S. cotton suppliers and the possibility of duties being levied against U.S. cotton. Consequently, the mills are urging timely shipment of U.S. cotton purchased earlier this season and turning their attention to other growths such as Greek and Brazilian.
Holiday influences also may have slowed spot market sales in recent days. Producers sold 35,636 bales online in the four trading days ended Dec. 31, down from the previous period when 77,426 bales were sold. Average prices received by producers ranged from 55 to 57 cents per pound compared to 56 to 57 cents the previous week.
After the close of Wednesday's ICE session, one market analyst noted "it was a fitting end to a very bearish year for cotton futures which fell 24.37 cents per pound since Dec. 31, 2013." Cotton prices this year ranged from a high of 97.35 cents on March 26 to a low of 57.84 on Nov. 20, the analyst added.
Meanwhile, winter weather conditions returned to West Texas this week and were expected to remain into the weekend. Icy road conditions may have affected the delivery of cotton modules from fields to gin yards.
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