Market touched the high after the Fed unexpectedly left stimulus intact. Intensified cotton competitor exports have affected U.S. shipping pattern.
Cotton futures surged to a new high for the move and settled near there Wednesday at the highest finish in a month.
Benchmark December settled up 110 points to 85.54 cents, its highest close since Aug. 20 and just off the high of its 148-point range from down 33 points at 84.11 to up 115 points at 85.59 cents. October closed up 96 points to 85.73 cents and March up 99 points to 85.14 cents.
Federal Reserve officials kept their monthly $85 billion bond-buying program intact, saying they wanted to see more evidence that the economy can sustain improvement before scaling back on the bond purchases, Dow Jones Newswires reported. But they made clear they are poised to reduce the program if they saw more evidence of a strengthening economy.
The cotton market, already trading just above 85 cents in December shortly before the Fed announcement, touched the session high in the late going right after that.
Volume increased to an estimated 15,600 lots from 11,445 lots the previous session when spreads totaled 3,403 lots or 30%, EFS 59 lots and EFP 38 lots. Options volume totaled 2,707 calls and 3,325 puts.
An increase in U.S. weekly export sales wouldnΆt be particularly surprising in the USDA report set for release at 7:30 a.m. CDT Thursday.
Some market participants have wondered whether some spillover sales from late the previous reporting week also might be included in the new data for the week ended Sept. 12. Net all-cotton sales registrations were 150,400 running bales for the week ended Sept. 5.
The market hit a new three-month intraday low at 82.11 cents, basis December, on Sept. 5, and some say itΆs possible sales made then may not have been registered in time for inclusion in last weekΆs report. Intraday prices during the week ended Sept. 12 ranged from 82.25 to 84.86 cents and closing prices from 83.21 to 84.75 cents.
Anyhow, surging competitor exports have altered the U.S. shipping pattern, according to USDAΆs Foreign Agricultural Marketing Service.
Record production in Brazil and Australia from 2010 through 2012 has resulted in sharply higher exportable supplies. Consequently, those countries have seized a larger share of the global market. The intensified competition has influenced buyersΆ purchasing patterns and U.S. shipping.
During the first three months of the marketing years, U.S. exports have been affected by the availability of BrazilΆs new crop. After BrazilΆs and AustraliaΆs exportable supplies have dwindled, U.S. exports have rebounded, only to fall off in the last quarter as the new Australian crop becomes available.
Thus, FAS analysts point out, the window of demand for U.S. cotton has shifted and narrowed to the December-April period.
The USDA cut its September estimate of U.S. exports 200,000 bales from a month earlier to 10.4 million. It raised IndiaΆs exports 750,000 bales to 4.2 million on larger exportable supplies with a million-bale increase to a record 29 million in the crop.
AustraliaΆs estimated exports were cut 100,000 bales to 4.2 million on tighter exportable supplies and BrazilΆs remained at 2.6 million bales.
Changes among major importers included increases of 300,000 bales to 1.5 million in India on strong early season demand, 150,000 bales to 4.1 million in Turkey and 150,000 bales to 2.7 million in Indonesia on higher consumption.
Futures open interest expanded 2,123 lots Tuesday to 176,496, with DecemberΆs up 1,054 lots to 118,997 and MarchΆs up 1,110 lots to 44,545. Certificated stocks declined 88 bales to 15,056.
World values as measured by the Cotlook A Index gained 35 points Wednesday morning to 90.30 cents. The premium to TuesdayΆs December futures settlement narrowed nine points to 5.86 cents.
