ICE cotton rose for the fourth straight session on Wednesday, hitting a five-month high as certified stock levels remained near 2012 lows, indicating strong demand for US cotton on the physical market. The most-active May cotton contract on ICE Futures US rose 0.79 cent, or 1.2 percent, to settle at 65.32 cents a lb, after rising as high as 65.44 cents a lb, the highest level for the second-month since September 2014.
Exchange stocks were unchanged at 10,685 bales on Tuesday, close to the lowest levels since 2012, according to the most recent ICE data. The low stocks indicate that significant business was being done on the cash market, reflecting demand for the high-quality cotton produced in the US harvest this year, said Louis Rose, an independent cotton trader and consultant at Risk Analytics in Memphis, Tennessee.
"The thing keeping it propped up the most is the fact that we don't have any cert stocks," Rose said. With the day's rally, the second-month continued its rise into technically overbought territory, with its 14-day relative strength index rising to 72.253, its highest since January 2014. Traders looked ahead to this week's US Department of Agriculture's export sales report, due out Friday rather than its usual release date of Thursday due to Monday's Presidents Day holiday. This week will likely show weaker sales than recent weeks, as top-consumer China and other buyers of cotton from the United States, the world's top exporter, would likely not be enticed by the higher prices seen in recent weeks, Rose said.