Market exploded from a slow start to finish at the highest settlement since July 28. Export sales report due Thursday.
Cotton futures exploded from a slow start to finish with strong gains Wednesday, triggering a series of buy-stops to reach an intraday peak above highs of the prior three weeks.
Benchmark December settled up 165 points to 65.81 cents, in the upper quarter of its 207-point range from down three points at 64.13 to up 204 points at 66.20 cents. It posted its highest intraday print since July 25 and its highest close since July 28.
Technical signs that the market may have carved out a potential near-term bottom helped to fuel the drive to higher ground, analysts said.
Volume quickened to an estimated 21,000 lots from a final 10,160 lots the previous session when spreads accounted for 3,072 lots or 30%, EFS 262 lots and EFP 10 lots. Options volume totaled 2,985 calls and 3,895 puts.
December had coiled within tightening daily ranges since it hit the contract low on Aug. 1 and had seesawed in recent days around its nine-day moving average as trading volumes diminished. It hasnΆt tested the contract low since it bounced off it to start the new marketing year with a gain on the day.
Underlying commercial buying has offered support as speculative selling has abated. Support also has stemmed from a decline reported in U.S. crop conditions this week and talk that new declines may be ahead.
Indications that ChinaΆs 2013-14 imports appear likely to top USDAΆs August estimate have reinforced a possible further tightening of already tight U.S. old-crop supplies. Talk had circulated earlier that Chinese mills may need to use import quota by the end of the year.
Stocks in deliverable position on futures contracts have shown a steady decline and questions have arisen as to whether they can be adequately replenished by the time December approaches its first notice day on Nov. 21.
A significant portion of the U.S. 2014-15 outstanding export sales of 4.514 million running bales as of Aug. 7 is believed owed for shipment between now and December.
All-cotton export sales for shipment this season slowed to 179,700 running bales during the week ended Aug. 7 from 252,300 bales the prior week. However, sales to 21 countries indicated broad-based buying interest.
Merchants may have been reluctant to sell more because of tight available supplies, some analysts say, and mills may have been reluctant to buy more with the harvest of a big new crop on the horizon.
Under these circumstances, some traders expect the report for the week ended Aug. 14 to show sales about steady to slightly lower. The USDA report is scheduled for release at 7:30 a.m. CDT Thursday.
Futures open interest dropped 871 lots Tuesday to 164,976, with DecemberΆs down 1,383 lots to 111,672 and MarchΆs up 408 lots to 42,699. Certificated stocks declined 1,459 bales to 86,690.
World prices as measured by the Cotlook A Index gained 25 points Wednesday morning to 73.50 cents, narrowing the premium to TuesdayΆs December futures settlement by seven points to 9.34 cents.
