US cotton futures rose quietly on Wednesday, as the market consolidated above last week's five-year low on fresh buying, but the contract remained in technically oversold conditions. The most-active December cotton contract on ICE Futures US settled up 0.61 cent, or 1 percent, at 64.35 cents a lb. On the 14-day relative strength index, the spot contract rose to 25.6, still in technically oversold territory but up from 11.9 on July 31, the weakest since 1986.
"With a report coming, the market is oversold and we are seeing some (buying) pressure," said Sterling Smith, futures specialist for Citi in Chicago, referring to the US Department of Agriculture's monthly supply-demand report scheduled for release August 12. Cotton futures moved in line with the 19-commodity Thomson Reuters/Core Commodity CRB Index, which closed up 0.6 percent at 294.03, led by gains in the grain and gold markets.
The market is correcting upward after a 20 percent slide over the last six weeks to a five-year low at 62.02 cents per lb last week after the US Department of Agriculture (USDA) projected that US cotton stockpiles would climb to a six-year high of about 5 million bales by the end of the 2014/15 crop year. The USDA has also forecast that global inventories will swell to a record of nearly 106 million 480-lb bales. A sharp drop in cotton prices overseas and a weak monsoon have raised India's imports in recent weeks, which could lift shipments more than 25 percent above the official forecast for this season ending September and help support cotton futures.
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