U.S. dollar index weakness offered support. Market took in stride Turkish dumping duty on U.S. cotton imports. Crop estimate in India cut to 160,000 bales below USDAΆs April forecast.
Cotton futures finished on a new high for the move Tuesday, extending the prior sessionΆs upside breakout as a weaker U.S. dollar index offered support and helped to stimulate broad commodity buying.
Most-active July finished up 84 points to 63.07 cents, its highest close since Jan. 25 and near the high of the sessionΆs 171-point range from down 72 points at 61.51 to up 99 points at 63.22 cents.
Maturing May settled up 54 points to 62.89 cents and December closed up 59 points to 61.59 cents, the new-crop contractΆs highest finish since Feb. 3.
The dollar index weakened on the heels of a report showing U.S. homebuilding slowed last month to the lowest since October, seen as bolstering the case for the Federal Reserve to hold off on raising interest rates. It was down 0.545 to 93.915 shortly after the cotton market closed.
Volume slowed to an estimated 44,258 lots from 71,666 lots the previous session when spreads accounted for 27,856 lots or 39%, block trades 2,000 lots and EFS 1,644 lots. Options volume totaled 9,809 calls and 3,910 puts.
The market took in stride news that Turkey has imposed a 3% antidumping duty on all U.S. cotton fiber imports, effective immediately.
Turkey is the second largest export market for U.S. cotton with shipments ranging between 1.5 million and 2 million bales. The National Cotton Council steadfastly challenged assertions that U.S. cotton was dumped into Turkey, injuring the domestic fiber market.
The import duty puts U.S. cotton at a competitive disadvantage to cotton produced in other countries, seriously jeopardizing business with Turkish mills, the NCC said in a news release.
Council Chairman Shane Stephens said the investigation of U.S. cotton imports, initiated in October 2014, was in response to several U.S. trade investigations of Turkish steel imports.
In an unusual move, he said, the Turkish government self-initiated the investigation without any showing of special circumstances as required under World Trade Organization rules.
The NCC submitted ample evidence that TurkeyΆs cotton market has experienced price declines owing to the same factors affecting cotton markets worldwide, he said. Government policies in developing countries and competition from manmade fibers have contributed to stagnant global demand, increased stocks and lower cotton prices, he said.
“The council will continue to actively oppose the imposition of duties and is exploring ways to reverse the decision, such as WTO mechanisms and the Turkish judicial system,” Stephens said.
U.S. outstanding 2015-16 upland export sales to Turkey totaled 491,500 running bales as of April 7, according to the latest USDA figures, and were 49,700 RB for shipment next season. Upland shipments to Turkey this season totaled 891,900 RB.
In other international news, the Cotton Association of India has reduced its 2015-16 crop estimate to 34.1 million 170-kilogram bales or 26.64 million 480-pound bales from 34.5 million and 26.95 million bales, respectively, a month ago.
The new CAI forecast is 160,000 480-pound bales below USDAΆs estimate earlier this month for the worldΆs largest cotton producer.
The largest USDA ending stocks revisions this month were for China and India, down 500,000 and 350,000 bales, respectively, owing to larger demand projections.
Those two countries are forecast to control 73% of global stocks. By comparison, Brazil and the United States, the next largest stock holders, together will account for 9% of the total.
Futures open interest fell 1,383 lots Monday to 193,791, with MayΆs down 6,684 lots to 14,915 and JulyΆs up 2,626 lots to 110,286. Cert stocks were up three bales to 41,736. There were four newly certified bales and one bale decertified.
