ICE cotton rose in heavy, rangebound trade on Thursday, buoyed by chart signals and a pick-up in US export shipment data that offset worries over Wednesday’s bearish monthly US government forecast. The most-active December cotton contract on ICE Futures US closed up 0.64 cent, or 0.8 percent, at 77.83 cents a lb after trading in a tight range of about one cent throughout the session.
The gains pulled the contract from technically oversold territory. Its 14-day relative strength index rose to 35.7 from 28.2 on Wednesday. Volumes were again heavy in spread-related dealings. The July contract, which is due to expire on July 9, ended up 0.11 cent, or 0.1 percent, at 85.62 cents a lb. An increase in weekly US export shipments was “encouraging” and bolstered prices, said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia.
Weekly US Agriculture Department (USDA) data showed US exporters shipped 182,700 running bales of previously-booked orders in the week ended June 5. That was up 9 percent from the previous week, though down from the four-week average. The week-over-week rise offset selling after Wednesday’s bearish monthly USDA report that forecast US inventories will reach a six-year high of 4.3 million 480-lb bales and world stocks will hit a record of 102.7 million bales by the end of July 2015.
The bearish forecasts were widely being discounted and traders had already priced in expected higher output in the United States, the world’s top exporter, next season, Brown said. “The market has been acting like the Texas crop has been made. It’s been planted but it’s not made yet,” he said. Rains have showered Texas in recent weeks, easing worries over a multi-year drought in the top-producing state. ICE inventories rose to 417,920 bales from 412,847 bales previously, climbing toward May’s ten-month highs, exchange data showed.