ICE Futures U.S. cotton ended the week lower Friday as continued downside
pressure from speculative fund selling capped any upside support from a weak
dollar.
Front-month May cotton settled at 79.69, down 49 points. The contract traded
in positive territory to a session high of 80.73 cents, but was caught by
continued speculative fund selling to end lower. July settled at 80.96 cents,
down 31 points.
"There was a sharp selloff in the old crop on Wednesday and Thursday amid
dollar strength," said Sharon Johnson, senior cotton analyst at First Capitol
Group in Atlanta. "And with a weaker dollar today, the market attempted to
recover, but the weakness earlier in the week brought in more speculative
selling today."
The U.S dollar was lower against the euro as the market responded to news
that an agreement for financial aid for Greece will be provided by the European
Union and International Monetary Fund if needed.
Cotton futures ended the week lower after the market was fraught with
overbought conditions and was in need of a break, said Johnson. "Cotton has
been up a great deal. It made a significant bottom one year ago this month and
it's been going straight up ever since and now it caught up to us."
Weak export sales earlier in the week were a sign that mills are revolting
against higher prices and failed to move forward to buy more cotton, Johnson
said.
Net U.S. cotton sales sharply decreased in the week to March 18 to 95,400
running bales, from 277,900 bales the week before, according to the U.S.
Department of Agriculture. However, exports of U.S. cotton increased to 308,700
running bales, from 300,100 the previous week.
A previous low close of 80.47 cents was taken out Friday and will lead to
further follow-through selling next week ahead of the USDA's release of its
prospective plantings report March 31.
"The March intentioned are out next week, so I expect to see some further
retracement on Monday and Tuesday, and then on Wednesday the [USDA] numbers
will guide us," said Johnson. From there, weather conditions for springtime
plantings will lead the way.
ICE Settle Change Range (at time of settlement)
May 79.69 dn 49 pts 79.27-80.73
July 80.96 dn 31 pts 80.38-81.74
Dec 74.66 dn 32 pts 74.50-75.00
*ICE settlements in cents per pound