Cotco Company is sending USDA Sales – Export weekly report and some market news as follows:
July ICE cotton futures rose to the upper limit of 300 points on Thursday following strong USDA export sales data. However, most of the market’s levels were in place prior to Sale-Export data being released, this is also a result of the Fed’s statement yesterday that further rate hikes can be avoided.
- ICE July: closed at 81.76, up 300 points;
- ICE December: closed at 81.40, up 236 points;
- July Open interest: approximately 91,000 contracts;
- Total open interest for futures months: increased to nearly 172,000 contracts.
During the week ended 27th April, US Cotton sold and exported approximately 256 thousand bales and 439 thousand bales of UPLAND+PIMA for crop 22/23, respectively. Sales were again mainly to China, Vietnam, and Turkey.
The upside factor is also related to the news that US cotton acreage is likely to decrease – as a boost for cotton prices.
Seed dealers in the United States receive many canceled orders as producers choose to replace cotton with soybeans. Another spot broker reported that a client who grows 2 thousand acres of cotton annually is planting exactly 0 acres of cotton this season. Soybean acreage across the southern United States is forecast to be much higher than originally expected.
Based on USDA sales and export reports that have improved in a row in recent weeks, demand is trading above 80 cents to free up supply. If the trading pattern in this range again coincides with continued drought conditions across Texas and cool/wet conditions in the Plains and Southeast, the market could see a stronger resilience than before USDA reports for production, demand, yield and inventory data of May next week.
Poor U.S. acreage is underpinning the confidence of speculators and traders, so there is plenty of technical incentive to forward the cotton contract in the 80-90 cent.
