NEW YORK: New York-traded cotton ended up for the first time in three sessions on Friday as players looked beyond a drop in weekly exports and focused on inventories that were expected to stay tight due to lower output.
The U.S. Department of Agriculture said export sales of 2013/14 cotton totaled 78,200 running bales last week, well below the previous week's tally of 120,300 bales.
With domestic cotton output at a four-year low and local demand for fiber running strong since December, traders remain hopeful that the USDA will cut inventory estimates for the No. 1 exporter of the commodity when the 2013/14 crop year draws to a close on July 31.
"The market doesn't seem to be in the mood for any bearish news now," said Keith Brown, founder of cotton brokerage Keith Brown & Co in Moultrie, Georgia.
"Today's weaker U.S. exports aside, we also had data this week showing China's cotton imports down. But the market is showing resilience instead, probably because the path of least resistance in cotton has essentially been higher for weeks."
At Friday's close, the most-active May cotton contract on ICE Futures U.S. settled up 0.70 cent, or 0.8 percent, at 88.35 cents a lb.
The rebound helped the May contract recover part of a 2 percent drop over two earlier sessions. For the week, the contract ended down 0.5 percent.
Cotton was one of the better performing commodities of 2013, gaining 13 percent mostly on a November-December rally driven by a pickup in U.S. sales that cut into inventories. Price gains have moderated since, to around 4 percent year-to-date, as some mixed signals in demand arose.
O.A. Cleveland, a Mississippi-based economist who follows cotton, said one worrying factor for him was the persistent cancellation of imports in recent weeks by key buyers of U.S. cotton, including Turkey, China and Vietnam.
"While cancellations were not widespread, the bulk came from the most recent active buyers. This issue will hang over the market and act to tone down bullish signals," he said.
In the longer term, the USDA is also projecting a more well-supplied market.
The U.S. cotton crop is expected to jump to 16.3 million bales 2014/15 from 13.2 million in 2013/14, due to a strong rise in planting acreages and lower abandonment, the USDA said on Friday.
Ending stocks will jump to 4.6 million bales in 2014/15, up 53 percent from the current crop year, USDA said.
China, the world's largest cotton importer, will also cut its purchases by 27 percent to 8 million bales.
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