Plains Cotton Cooperative Association (PCCA) Weekly Cotton Market Report: December 4, 2015

Cotton Futures Mostly Unchanged Despite a Volatile Week

Cotton futures prices were mostly unchanged in the week ended Dec. 10 despite some volatility in the market. March cotton traded up to 65.23 cents per pound, its highest since Aug. 24, just ahead of the release of USDA’s monthly World Agricultural Supply and Demand Estimates (WASDE) on Wednesday. Some analysts said the estimates were “quite bullish,” and others described them as simply “supportive.”

Dec. 4

The marketing week began last Friday with cotton futures at the Intercontinental Exchange (ICE) settling higher across the board. March cotton started the session lower but moved to positive ground and traded higher for the remainder of the day. The contract settled 76 points higher at 64.71 cents. Some traders suspected speculative buying was supportive.

Dec. 7

A stronger dollar and weaker energy complex seemed to weigh on all commodities Monday. Cotton futures prices spent the ICE session in consolidation, trading on both sides of unchanged and settling mixed. March cotton retreated 14 points, settling at 64.57 cents per pound, and May cotton was unchanged. One market newsletter also noted the declining loan deficiency payment (LDP) to explain the selling in the futures market.

Dec. 8

Tuesday was another down day for nearby cotton futures as traders seemed guarded ahead of the WASDE report. Contracts traded sideways for most of the session, and March settled marginally lower at 64.44 cents, down 13 points.

Dec. 9

Cotton again traded in a sideways fashion Wednesday morning before buyers returned. After the release of the WASDE report at 11:00 a.m. CDT, March cotton moved off its high of 65.23 cents as the report showed estimates for a smaller available supply and lower exports. However, the ICE session ended with all contracts moderately higher. March settled at 64.81 cents, up 37 points.

USDA lowered its estimate of the U.S. crop by 250,000 bales this month to 13.03 million and reduced exports by 200,000 bales to 10.0 million. The estimate for Texas production was unchanged at 5.8 million bales. The biggest changes were contained in the world numbers.

The world cotton crop estimate was reduced 1.92 million bales led by a million-bale cut in Pakistan’s crop, and China’s crop was lowered 700,000 bales to 24.3 million. USDA also lowered its estimate of world consumption by 200,000 bales, but world ending stocks were lowered 1.7 million bales to 104.39 million.

Dec. 10

The dollar regained strength Thursday, and along with a weak export report, seemed to energize selling in the cotton market which sent cotton futures sharply lower. Nearby contracts traded lower for most of the ICE session, and March settled 104 points lower at 63.77 cents.

USDA reported net export sales of U.S. upland cotton totaled just 78,700 bales in the week ended Dec. 3, down 73 percent from the previous week and 64 percent from the four-week average. Featured buyers were Turkey, South Korea and China. Export shipments for the week totaled 111,800 bales, up 39 percent from the previous week and 51 percent from the four-week average. Primary destinations were Mexico, Vietnam and Turkey.

In the spot cotton market, producers sold 64,381 bales online in the week ended Dec. 10, down from 94,724 bales the previous week. Average prices received this week ranged from 59 to 60 cents per pound.