ICE cotton suffered its largest single-session loss in three weeks on Wednesday, due to profit-taking ahead of the release of weekly export sales figures, which are expected to be weaker after a string of strong weeks. The most-active May cotton contract on ICE Futures US fell 0.73 cent, or 1.2 percent, to settle at 62.16 cents a lb. That was the sharpest single-day fall since January 20.
Front-month March cotton dropped 0.49 cent, or 0.8 percent, to settle at 62.02 cents a lb, also the largest drop since January 20. Cotton has rallied substantially since the front-month contract hit a near 5-1/2 year low at 57.05 cents a lb on January 23, hitting a three-month high at 63.44 cents in the prior session. However, cotton later pared gains and settled substantially below those highs on Tuesday, sending a negative chart signal to potential buyers, according to Jobe Moss, a broker with MCM Inc in Lubbock, Texas.
"You've got a long tail up above there," Moss said. "Everybody that bought it at the open or higher came back a loser." In addition, the prior session's highs provided an attractive opportunity for profit-taking ahead of the US Department of Agriculture's (USDA) weekly export sales report due out Thursday, which is expected to show fewer new sales and shipments than prior weeks, Moss said.
Strong weekly sales reports in recently have prompted speculator short-covering, boosting fiber prices more than 6 cents a lb off late January's lows. As of the week ended January 29, US producers had sold 9.4 million bales, nearly 90 percent of the USDA's total estimate for exports in the 2014/15 crop year, which ends on July 31, of 10.7 million bales.
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