Cotton futures at the Intercontinental Exchange (ICE) settled higher two out of the three session leading up to the Thanksgiving Holiday this week, and contracts broke through 60.00-cent resistance Wednesday. March cotton traded up to 60.55 cents per pound during the session before settling at 60.03, up 72 points. One analyst noted the rally appeared to have been led by strength in December which is about to expire. At one point, the contract was up 234 points and eventually settled at 61.41 cents, up 175. The analyst also mentioned rumors of export sales to China during the session and possible speculative short covering.
Prices traded on either side of unchanged Tuesday before buying stepped in and lifted contracts higher. March cotton moved away from new contract lows established during the previous session and settled in the upper half of its 90-point intraday range. The contract settled at 59.31 cents per pound, up 50 points, and other contracts settled with moderate gains. Chinese cotton futures also were higher Tuesday, the U.S. dollar was weaker, and most traditional commodities also enjoyed a modest rally.
There was little, if any indication at the beginning of the week that the cotton market was poised for a two-day rally. Monday’s ICE session saw March cotton extending losses late in the day, trading as low as 58.53 cents per pound before settling at 58.81, down 71 points and just above its life-of-contract low settlement of 58.75 set on Nov. 13. Cotton was not alone Monday as other commodities moved lower.
Meanwhile, traders and analysts were expecting a much improved export sales report from USDA, and they were not disappointed. The department reported net sales of U.S. upland cotton totaled 305,700 bales in the week ended Nov. 20, a marketing year high. China accounted for almost one- third of the sales volume followed by Vietnam and Indonesia. Export shipments for the week totaled 107,600 bales, up 72 percent from the previous week and 50 percent from the four-week average. The primary destinations were China, Mexico and Turkey.
The increasing loan deficiency payment (LDP) continues to encourage producers to sell their crops in the spot market. For the four trading days ended Nov. 26, producers sold 36,998 bales online compared to 32,888 bales sold online the previous week. Average prices received by producers ranged from 55 to 57 cents per pound versus 55 to 58 cents the previous week.
Also helping the movement of cotton from producers’ hands is the progress of the U.S. harvest. USDA’s latest progress report showed 77 percent of the anticipated U.S. crop had been harvested as of Nov. 23. The five-year average for that date is 83 percent. Texas producers had harvested 57 percent of their estimated crop versus the five-year average of 79 percent. The harvest in Oklahoma and Kansas stood at 56 and 46 percent, respectively.
(Source – http://www.farms.com/news/cotton-market-weekly-27-11-2014-84675.aspx)