ICE cotton futures rose for the third straight session to more than two-week highs on Friday after a US federal report showed strong export sales numbers for top consumer China, with prices further supported by weather-related crop woes. The December cotton contract on ICE Futures settled up 0.24 cent, or 0.35 percent, at 68.59 cents per lb. It traded within a range of 67.95 and 68.92 cents a lb. "Today's (Friday's) export sales figures... were solid as per the market's anticipation," Anestis Arampatzis, risk management consultant at INTL FCStone, wrote in a note.
Weekly export sales data from the US Department of Agriculture (USDA) for the week ending June 29 showed net upland sales for 2016/2017 totalled 194,200 running bales, down 26 percent from the previous week. However, the report showed increases of 43,100 for China, which also purchased 65,600 bales for the 2017/18 crop year. For 2017/2018, net sales of 297,200 bales were reported. "When both crop years are bandied together, total sales were 491,400 bales, and that ain't bearish," said Keith Brown, principal at cotton broker Keith Brown and Co in Moultrie, Georgia.
"The US crop is deteriorating a little bit. In some parts of the country in the delta it has been too wet and the crop is delayed. In the south east it has been too hot and dry in the last few days. There were some hail storms in west Texas last week that erased some acreage." As of July 2, 54 percent of the cotton planted was rated good-excellent, according to a USDA report, a 3 percent downgrade from previous week.
Speculators cut a bullish bet in cotton futures and options for a seventh straight week to the lowest level since May 2016. Dealers lowered their net long position in cotton by 5,721 contracts to 25,413 in week to July 3, US Commodity Futures Trading Commission data showed on Friday.
"We feel that the onslaught of spec selling is over for now and that the trade isn't going to sell the market in the mid-60s either... with the crop being drawn out and slightly behind schedule we don't expect any supply pressure until early 2018," Peter Egli, director of risk management at British merchant Plexus Cotton, said in a note. "This should allow the current base building to continue and eventually lead to a bounce into the 70-72 cents area, where we would expect solid resistance unless a crop problem were to develop."
Meanwhile, the July cotton contract on ICE Futures US, expired on Friday. Total futures market volume fell by 2,111 to 18,178 lots. Data showed total open interest gained 1,798 to 209,279 contracts in the previous session. Certificated cotton stocks deliverable as of July 6 totaled 109,167 480-lb bales, down from 293,761 in the previous session.
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