PCCA Plains Cotton Cooperative Association : Cotton Market Weekly

January 8, 2016

United States Export Sales Slowdown

Export sales for the week ended December 31, 2015, were down 22 percent from the previous week. Volume at the Intercontinental Exchange (ICE) was active with 30,600 contracts for the first trading day of the New Year.

Jan. 4

Cotton futures moved lower Monday at the Intercontinental Exchange (ICE). March cotton moved to a low of 62.51 cents per pound, a level not seen since November 30, 2015, before settling at 62.61 cents per pound. According to one analyst, 'just turning the day on the old year does not get rid of all the surpluses that have caused the low prices the market suffered last year.'

Jan. 5

Tuesday March cotton traded in a narrow 35-point range before settling up seven points at 62.68 cents per pound. The March contract has settled lower in all by six sessions over the past four weeks, netting a loss of 203 points. Both May and July cotton settled down at 63.45 and 64.17 cents per pound, respectively. The most surprising statistic for Tuesday, according to one analyst, was the change in open interest was very small, less than 0.5 percent in a day with substantial volume.

Jan. 6

The March contract traded in a sideways manner with very little movement during early trading on Wednesday. However, selling pressure picked up and March moved lower the rest of the session. During the last hour of trading, it fell to a low of 61.86 cents per pound before settling at 62.00 cents, down 68 points.

Jan. 7

The market suffered its second straight day of rather measurable losses. On Thursday, trading volume surged while prices dropped below 61.45 cents per pound, the late November low. March cotton continued its downward trend falling to a low of 61.21 cents per pound at 61.43 cents per pound, down 57 points.

The U.S. Department of Agriculture reported net sales of upland cotton for the week ended December 31, 2015, totaled 82,000 bales, down 22 percent from the previous week. Primary buyers included China, Pakistan and Turkey. Export shipments totaled 161,700 bales to Vietnam, Turkey, Indonesia, Thailand and Peru. According to one analyst, traders are expecting better weekly export sales reports for next week.

In the spot cotton market, producers sold 12,166 bales during the week, down significantly from 67,056 bales the previous week. Prices ranged from 55 to 57 cents per pound.

Southern California has experienced record-setting rainfall this week. However, drought conditions continue across the state. West Texas will see a cold front enter the area with a chance for precipitation going into the weekend. According to the latest reports from NOAA, it suggests a greater-than-average chance of precipitation over the next few months from California through Texas.