Cotton prices at the Intercontinental Exchange (ICE) rallied sharply Monday and erased almost half of the previous week's loss. One analyst attributed the gains to an oversold condition and the beginning of index fund rebalancing as prices opened firm and stayed above unchanged throughout the session.
March cotton traded up to 61.14 cents per pound during Monday's ICE session before settling at 60.71, up 113 points. May cotton gained 109 points at the close of trading, settling at 61.34 cents, and December settled at 64.94, up 103. With the gains, cotton futures were back in the middle of a 58.53 to 63.70-cent range that has been in place for eight weeks.
Following Monday's excitement, traders seemed more focused on larger economic issues and the next supply and demand estimates from the U.S. Department of Agriculture scheduled for release on Jan. 12. Among the economic issues, one newsletter mentioned lower crude oil prices, a stronger dollar and weaker Euro.
Cotton futures opened lower Tuesday at ICE, and March settled near the low end of a 115-point trading range. The contract ended the session at 60.20 cents per pound, down 51 points. Most other contracts posted similar losses as demand appeared to be lacking to sustain the previous session's rally.
It appeared Wednesday's ICE session would be a repeat as cotton futures opened under modest pressure and spent most of the day in negative territory before a late surge. March cotton settled 23 points higher at 60.43 cents per pound, May was 15 points higher at 60.91, and December settled at 64.47 cents, up 7 points.
It was much the same story on Thursday as futures traded around unchanged for most of the session and held in a narrow range. March settled near the top end of a 44 point range, settling at 60.56 cents per pound, up 13 points. May cotton gained 21 points at the close of trading, and December managed to gain 1 point to settle at 64.48 cents. The market seemed to ignore a positive export sales and shipment report released early Thursday morning.
The U.S. Department of Agriculture reported net sales of U.S. upland cotton totaled 149,900 bales in the week ended Jan. 1, up 68 percent from the previous week but 13 percent less than the four-week average. China, Vietnam and Taiwan were the featured buyers. Export shipments that week reached a marketing year high at 205,800 bales, up 21 percent from the previous week and 11 percent from the four-week average. The primary destinations were Turkey, China and Vietnam.
In the spot cotton market, producers sold 61,687 bales online in the week ended Jan. 8, up considerably from the previous, holiday-shortened week when 35,636 bales were sold. Average prices received ranged from 55 to 57 cents per pound, the same as the previous week.
In other news this week, Cotton Grower magazine released the results of its 2015 U.S. cotton acreage survey which showed a potential decline of 11.7 percent in planted acres for the coming season. Texas cotton acres will decline 12.4 percent compared to 2014, according to the magazine, and Oklahoma will decline 7.8 percent.
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