Cotton futures edge higher after USDA exports rebound


Forexpros – Cotton futures were up for a second day on Monday, amid indications of robust demand for U.S. supplies after data showed that U.S. export sales of the fiber spiked last week.

On the ICE Futures U.S. Exchange, cotton futures for May delivery traded at USD0.9073 a pound during European afternoon trade, gaining 0.64%.

It earlier rose by as much as 0.95% to trade at a two-day high of USD0.9097 a pound.

The U.S. Department of Agriculture said Friday that U.S. farmers sold 185,200 bales of cotton in the week ended February 16, a 75% surge from the previous week.

It also reported 22,000 bales of optional origin sales to China, while cotton for export inspected at U.S. ports totaled 326,200 bales, which exceeds the average amount needed to meet USDA’s current projections for the 2011-12 crop year.

China is both the world’s largest producer and consumer of the fiber.

Cotton traders have been focusing on prospects for increased Chinese demand in recent months after the country started a cotton stockpile in September to protect domestic farmers’ interests. However, that program is expected to end next month.

Meanwhile, gains were limited amid concerns that the recent rally in oil prices could create a drag on the global economic recovery.

The world economy is “not out of the danger zone” amid fragile financial systems, high public and private debt and rising oil prices, International Monetary Fund Managing Director Christine Lagarde said in a statement after a weekend meeting of finance ministers from the Group of 20 nations in Mexico.

Wall Street lender Citigroup said in a report published over the weekend that it expects the pace of economic recovery seen in the final months of 2011 to “lose momentum in the near term.”

Demand for cotton, as a non-food agricultural commodity, is seen as more closely linked to economic conditions and consumer sentiment than that for other farm crops.

Despite recent gains, USDA chief economist Joe Glauber estimated prices will average USD0.80 per pound in the 2012-13 season, which begins August 1, as global production was expected to outweigh demand.

Last week, the USDA said that U.S. farmers planted nearly 10% less cotton for next season, as the market remains fixated on the current season’s problems.

The USDA is scheduled to release another report on cotton plantings on March 30. The Prospective Plantings report is based on a poll of farmers’ planting intentions and is closely watched by the cotton futures market.

Elsewhere, on the ICE Futures Exchange, coffee futures for May delivery rose 0.3% to trade at USD 2.0455 a pound, while sugar futures for May delivery eased up 0.1% to trade at USD0.2528 a pound.