For the week ending Friday, June 30, ICE cotton futures bottomed on Tuesday, traded in a gradual uptrend through mid-week, then rallied more strongly through the end of the week (see chart above courtesy of Barchart.com). On Friday Dec’23 cotton settled at 80.37 cents per pound, up 134 points on the day and up 356 points from the Tuesday low. Chinese cotton prices were flat across the the week, while the A-Index of world cotton prices was flat-to-lower. CBOT corn and KC wheat futures weakened across the week, with CBOT soybeans following suit before recovering. The U.S. dollar index was mixed, starting off sideways/lower, then trending higher, then declining more sharply on Friday.
Cotton-specific influences this week included an unsurprising and slightly lowered (relative to March 31) forecast of U.S. cotton plantings from USDA. The weather continued unseasonably hot over Texas. The excess rains of the preceding month likely had mixed effects in northwestern Texas, now combined with wind and heat. The statewide regional summaries (click here and scroll down) generally reflect the transition to hot conditions. The resulting production uncertainty is clouding the U.S. cotton supply/demand and market outcomes.
On the other side of the world, the southwest monsoon appears to have caught up from it’s previously delayed progress over the Indian subcontinent. U.S. export sales were seasonally decent but actual export shipments remained below the needed weekly average pace. Of course, hypothetically, the pattern of cotton sales and shipments can be “lumpy” if major buyers like China step in with large, late-breaking purchases. Meanwhile, USDA’s weekly summary of the U.S. regional markets continued to reflect mixed spot physical trading activity and very light to moderate demand, across the U.S. regions. Macro influences (i.e., GDP, inflation, and interest rate policy) remain a potential headwind to longer term cotton demand.
ICE cotton futures open interest trended higher across the week, while futures settlements appeared to bottom and then trend upward. For the second week in a row, the regular weekly snapshot of speculative positioning (through Tuesday, June 27) reflected short positioning with from 9,445 new hedge fund shorts, week over week. This was slightly offset by 280 new hedge fund longs. But it was reinforced by the index fund net long position shrinking by 1,203 contracts, week over week.
For more details and data on Old Crop and New Crop fundamentals, plus other near term influences, follow these links (or the drop-down menus above) to those sub-pages.