By Carolyn Cui
Cotton prices got a boost Thursday on strong U.S. government export sales data and a skidding dollar.
The U.S. Department of Agriculture reported net export sales of 218,200 bales of upland cotton for the week ended August 11, up from 55,200 bales in the same week last year. Upland cotton is the most commonly grown variety in the U.S.
The sales took place in a week when cotton prices plunged, suggesting demand remained resilient. "That's encouraging for the market," said Andy Ryan, a senior analyst at INTL FCStone based in Nashville.
Since the beginning of the new marketing that began on August 1, U.S. fiber sales overseas were already one million bales ahead of last year. "The export sales so far this year were off to a much better start than they were last year," he said.
Cotton inventories at many spinning mills in Asian countries such as Pakistan and Vietnam are low, as producers got accustomed to steady cotton prices during the past two years and only come to the market when there is a need.
On Wednesday, the Federal Reserve's July meeting minutes showed that policy makers were still waiting to accumulate more economic evidences before resuming its rate-hiking process. The dovish stance drove down the dollar, helping nudge up commodities, which are denominated in the currency. Almost all soft commodities were in positive territory early Thursday.
Raw-sugar futures for October rose 1.8% to 20.08 cents a pound, while December cocoa added 1.3% to $3,118 a ton, the highest in a month. Arabica coffee for September was up 2.1% to $1.4115 a pound. The only outlier was frozen concentrated orange juice futures, whose September contracts edged down 0.2% to $1.7525 a pound.
Early this month, December cotton lost 11% of its value over a span of 10 days on fears that better precipitation in Texas could help restore production while China's extended auctions would unleash more cotton into the markets from its massive state reserves.
For now, rain seems to be less of a concern. "West Texas has seen some rains in the last few days that have helped the crop. Rains were reported over the weekend and should be beneficial for the stressed crop," wrote Jack Scoville, an analyst with Chicago-based Price Futures Group. "Demand ideas remain firm."
