2017-12-06 / Farm & Ranch


Cotton Futures make impressive gains

December 1, 2017

This was a good week for bulls in the cotton market as futures prices at the Intercontinental Exchange (ICE) advanced three out of the five trading sessions. March cotton gained 167 points this week, mostly on renewed speculative buying as indicated by the rise in open interest. On Wednesday alone, open interest increased 5,371 contracts to 242,744. Good Export Sales Continue

The streak began the day after Thanksgiving when USDA released its export report, which showed net sales of U.S. Upland cotton totaled 357,000 bales in the week ended Nov. 16. Net sales for next marketing year totaled 43,100 bales. For the week ended Nov. 23, USDA reported net export sales of 276,500 bales. Featured buyers were Pakistan at 71,800 bales, China at 42,400, Turkey at 38,300 and Vietnam at 35,500 bales. Sales for delivery next marketing year totaled a net 52,800 bales. Export shipments in the most recent week totaled 112,200 bales. Primary destinations were Vietnam, China, Mexico, Indonesia and South Korea.

Current year-to-date export sales now total 10,513,958 bales. Weekly sales only need to average 110,723 bales in the remaining 36 weeks of this marketing year to reach USDA’s latest estimate of 14.5 million. Weekly shipments, however, continue to lag, needing to average 336,788 bales. The pace of shipments should increase as more cotton is ginned and enters the marketing pipeline. Harvest Progresses

This week’s USDA Crop Progress report showed 79 percent of the U.S. crop has been harvested, up 6 points from the previous week and only 1 point behind the fiveyear average. The Texas harvest stood at 71 percent, Oklahoma was at 73 percent, and Kansas was at 58 percent as farmers across the three-state region enjoyed mostly ideal weather conditions. Mill Buyers Turn Cautious

With the sharp rise in cotton futures on Wednesday, textile mills became more cautious, especially in Asia. Their caution was bolstered that day following Pakistan’s removal of restrictions for cotton imports from India. Up to that point, Pakistan had been a good customer for U.S. cotton. Reports indicated the pace of purchases of Indian cotton increased significantly. Improving Economies Good for Cotton

One bit of good news this week was signs of improving U.S. and global economies. In China, manufacturing expanded faster in November compared to the previous month. In the United States, strength in the stock market seemed to spill over into cotton.

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