Fed kept interest rates steady and said it is “closely monitoring” developments in global economies and markets. Cotton traders looked ahead to the U.S. weekly export sales-shipments report.
U.S. cotton futures fell to a new low close for the move Wednesday, extending a losing streak to three sessions in a row.
- Spot March finished down 55 points to 60.86 cents, in the lower quarter of its 77-point range from up six points at 61.47 to down 71 points at 60.70 cents. It settled at its lowest close since Oct. 2 and printed a new low intraday price since Oct. 9.
- May closed down 56 points to 61.45 cents, July down 42 points to 61.98 and December down 38 points to 61.50 cents.
- Volume slowed to an estimated 28,062 lots from 36,598 lots the previous session when spreads accounted for 16,075 lots or 44% and EFP 147 lots. Options volume totaled 987 calls and 5,174 puts.
The Federal Reserve signaled renewed worry about financial market turbulence and slow overseas economic growth and, as widely expected, kept interest rates unchanged at the conclusion of its two-day policy meeting.
The central bank said in a statement it would hold its benchmark steady for now, between 0.25% and 0.5%, and is “closely monitoring” developments in global economies and markets, Dow Jones Newswires reported.
The Fed said officials still believed the economy is on track to grow, produce jobs and gradually lift inflation to their 2% target, despite worries about falling stock and oil prices and uncertainty about overseas growth. However, officials were agnostic on whether the outlook has fundamentally shifted in light of developments since the last meeting, a sign of some lack of conviction about their economic forecasts.
Meanwhile, cotton traders looked ahead to the U.S. export sales-shipments report scheduled for release by USDA at 7:30 a.m. CST on Thursday for the week ended Jan. 21. Some sales expectations range from 125,000 to 200,000 running bales of upland for shipment this season.
That would compare with 194,600 RB registered the previous week and 138,800 RB for the four-week average. Closing prices during the reporting week, basis March futures, ranged from 61.41 to 62.47 cents.
Upland shipments the previous week totaled 136,000 RB and have averaged 138,800 RB the last four reporting weeks. The pace of shipments needs to improve to meet USDA’s all-cotton estimate of 10 million statistical bales, down 11% from 2014-15 exports.
The USDA estimates world exports at 36.05 million bales, up 1.9% from last season but down 22.7% from the record 46.65 million bales in 2012-13.
The record was attributable in large measure to ChinaΆs voracious import demand, which in 2012-13 totaled 20.33 million bales. ChinaΆs imports this season are estimated at 5.5 million bales, down 34% from last seasonΆs 8.28 million and down 14.83 million bales or 73% from 2012-13.
Reduced production and supplies are factors in limiting U.S. exports, which for all-cotton are estimated 1.25 million bales below a year ago.
In contrast, despite a smaller crop, IndiaΆs exports are forecast to rebound 1.6 million bales from last season to 5.8 million amid rising demand from Pakistan, also a buyer of U.S. cotton. Some analysts think IndiaΆs crop still is overstated.
Larger exports also are expected from Brazil and Australia, while those from Central Asia are projected to decline for the fourth consecutive season.
Futures open interest gained 413 lots Tuesday to 193,281, with MarchΆs down 2,241 lots to 112,531 and MayΆs up 2,160 lots to 30,985. Certificated stocks were unchanged at 57,396 bales.
