Cotton Futures Take a Roller Coaster Ride
After settling higher four consecutive sessions last week, cotton futures reversed course to begin this week ahead of the December contract’s first notice day on Nov. 23. Weather concerns and improved demand shown in the latest weekly export sales report, however, helped lift prices at mid-week ahead of the Thanksgiving holiday.
It appeared cotton futures might settle higher for a fifth consecutive session last Friday as the March contract moved higher until sellers returned. March then returned to negative ground as it met strong resistance between 63.50 and 64.50 cents per pound. The contract traded as high as 63.42 cents but settled at 62.83, down 29 points. Spread trading accounted for approximately 57 percent of the session’s turnover, according to one analyst.
Monday was the worst day for futures prices this week with one market observer mentioning increasing speculation that China was about to devalue its currency again. March cotton slowly moved lower throughout the session at the Intercontinental Exchange (ICE) and ended near the bottom of a 155-point range. The contract fell to 61.45 cents per pound in the final 10 minutes of trading and settled 123 points lower at 61.60 cents, its lowest level in just over a month.
March cotton moved higher when trading resumed Tuesday at ICE and stayed on positive ground the entire session with help from a weaker dollar and talk of improving business. Although the session was quiet in pre- holiday trading and volume fell to an estimated 13,700 contracts, all contracts settled with moderate gains. March cotton settled at 61.94 cents, up 34 points.
Cotton futures rallied strongly Wednesday as buyers returned to the board. March cotton reached a high of 63.66 cents per pound in the final hour of trading and settled at 63.28, up 134 points, its highest settlement since Oct. 22, according to Cotton Outlook. May and July cotton also posted triple-digit gains with volume estimated at 30,900 contracts.
Helping spur the rally was a forecast for freezing rain and sleet in West Texas starting Thursday and continuing into the weekend. Ahead of the arctic front, producers in the region were harvesting cotton at a rapid pace, and module haulers were working long hours to deliver the cotton to gin yards before the ground could become saturated by the expected precipitation. Meanwhile, harvesting was nearing completion in the Memphis territory with less than 10 percent of the crop still on the stalk in Mississippi, Missouri and Tennessee.
In other news, the U.S. Department of Agriculture reported net export sales of U.S. upland cotton totaled 267,600 bales in the week ended Nov. 19, a marketing year high. The sales volume was up 38 percent from the previous week and 96 percent from the four-week average. The featured buyers were Vietnam, Turkey and Thailand. The department also reported net sales of 38,000 bales for delivery in the 2016-17 marketing year. Vietnam and Malaysia were the featured buyers. Export shipments for the week totaled 90,800 bales, up 69 percent from the previous week and 2 percent from the four-week average. Mexico, Vietnam, Turkey, China, and Indonesia were the primary destinations.
In the spot cotton market, producers sold 31,713 bales online in the holiday shortened week ended Nov. 25. Average prices received ranged from 56 to 60 cents per pound. The previous week’s online sales volume totaled 63,514 bales with prices ranging from 57 to 58 cents per pound.