Cotton Market Goes Into Holiday Mode
Cotton traders appeared to start their holiday vacation early as daily volume slowed at the Intercontinental Exchange (ICE) and prices remained in a narrow range this week. A lack of any fresh fundamental news only added to the doldrums.
Last Friday’s ICE session was by far the best for cotton futures which settled higher following six consecutive sessions with lower settlements. March cotton moved higher soon after trading began and stayed on positive ground until light selling pressure returned and moved the contract to near unchanged. After a few hours, buyers returned and lifted the contract back to the plus column. March traded in a 98-point range before settling 70 points higher at 63.69 cents per pound. All other contracts settled with moderate gains. One analyst thought a weaker dollar and week-ending short covering may have contributed to cotton’s strength. Volume, however, was light at an estimated 17,400 contracts.
It initially appeared Monday would be another winning day for cotton futures. The March contract traded on positive ground for much of the morning and even reached a high of 64.16 cents per pound. Prices then were caught in two-sided action, and March settled 37 points lower at 63.32 cents. All other contracts settled with similar losses, and ICE estimated the session’s volume at just under 14,000 contracts. Some market observers seemed perplexed that a weaker dollar and reports that the Cotton Corporation of India had ended the auctions from its reserves did not provide a boost to cotton futures.
The narrow trading range and low volume continued Tuesday as March cotton traded in a sideways manner before reaching a high of 63.70 cents. The contract then moved lower when selling pressure intensified, followed by a tug-of-war between buyers and sellers. March finally settled at 63.16 cents per pound, down 16 points. Volume was estimated at less than 10,000 contracts.
March again traded briefly on positive ground Wednesday and in a narrow 62-point range, but light selling pressure once again emerged, sending the contract lower and settling at 62.77 cents, down 39 points. In the past 16 ICE sessions, March has settled lower 12 times totaling a loss of 77 points during those sessions, according to Cotton Outlook. The contract seems content to stay in its long term 62.00- to 64.00-cent range.
Meanwhile, West Texas producers made good progress in wrapping up the 2015 harvest ahead of forecasts for a major winter storm this coming weekend. Some estimates early this week pegged the harvest at 95 percent complete. Although a few gins have finished for the season, others were facing several days, if not weeks, of ginning activity.
In other news, China’s Ministry of Agriculture on Tuesday estimated the country’s 2015 cotton crop at 22.04 to 22.96 million bales. The China Cotton Association this month estimated the crop at 23.6 million bales, and USDA’s December estimate placed the crop at 24.3 million bales.