ICE cotton futures surged nearly 4 percent on Thursday to settle limit up, buoyed by strong export sales report, prompting the exchange to raise the daily trading limit to 5 cents per pound effective Friday. The session best level of 82.65 cents was an all-time high for the March contract and a peak since May 2014 for cotton futures.
"The fact that we had strong sales and no cancellations probably was as bullish as anything... We also hit a technical buy stop," said Louis Rose, director of research and analytics at Tennessee-based Rose Commodity. The US Department of Agriculture (USDA) on Thursday reported net upland cotton sales of 274,500 running bales (RB) for 2017-18 for the week ending Jan. 4. This was up 42 percent from the previous week and 16 percent from the prior 4-week average.
Exports of 281,600 RB, a marketing-year high, were up 35 percent from the previous week and 41 percent from the prior 4-week average. The most active ICE cotton contract for March expiry settled up 3.00 cents, or 3.77 percent, at 82.65 cents per lb.
"Mills continue to be caught flat-footed with an enormous amount of on-call purchases that are waiting to be priced in the March, May, and July contracts and the long speculator continues to drive the bus at the moment," Ron Lee, general manager at McCleskey Cotton in Bronwood, Georgia, said in a note. The market is keeping close track of the USDA's World Agricultural Supply and Demand Estimates (WASDE) report due on Friday.
"The report today has increased notions that USDA will raise their exports forecast," Rose said. Meanwhile, effective with the start of trading on Friday, daily trading limit for all cotton no. 2 futures contract delivery months will expand to 5 cents per pound above and below the prior day settlement price, the Intercontinental Exchange said on Friday.
A US government weather forecaster said La Nina conditions are likely to persist through the Northern Hemisphere winter. Total futures market volume rose by 29,341 to 62,103 lots. Data showed total open interest gained 2,151 to 288,105 contracts in the previous session.
Certificated cotton stocks deliverable as of Jan. 10 totalled 47,942 480-lb bales, unchanged from the previous session. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.46 percent.
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