March closed at 76.44 cents. Fed left policy rate unchanged and gave no hint of when it might move next. Traders looked to weekly export sales report. Mill demand reported relatively limited as January ended.
Cotton futures vaulted to a new high close since Aug. 8 on heavy volume Wednesday, breaking through a key resistance area along the way.
March settled up 159 points at 76.44 cents, near the high of its 165-point range from down three points at 74.91 to up 162 points at 76.56 cents. Its close above former 75-cent area resistance, now viewed as near-term support, brought into sight a technical target at the 78-cent August high.
May closed up 145 points to 77.05 cents, July finished up 141 points to 77.57 cents and December settled up 56 points at 72.39 cents.
Volume rose to an estimated 47,585 lots from 33,345 lots the previous session when spreads accounted for 19,783 lots or 59% and EFS 43 lots. Options volume increased to 15,335 lots — 9,135 calls and 6,020 puts — from 7,060 lots.
The Federal Reserve said it remains on track to gradually raise short-term interest rates this year and gave no hint about when the next increase might come, Dow Jones Newswires reported shortly before the cotton close.
Following a two-day policy meeting, officials unanimously held their benchmark rate steady in a range between 0.50% and 0.75%, while noting in a statement some recent improvements in the economy. They lifted rates by a quarter percentage point last month and penciled in three quarter-point moves in 2017.
U.S. dollar index futures traded up 0.145 to 99.625 against a basket of six major currencies around the time of the cotton close. It touched the session high of 100.060 on the heels of the Fed announcement, up from the early morning low of 99.480, but then slipped.
Looking ahead, cotton traders awaited the USDA export sales report set for release at 7:30 a.m. CST Thursday for the week ended Jan. 26.
This report in this season of robust export demand will follow a week in which net U.S. upland sales surged to a marketing year high of 457,000 running bales. Those were the largest since Jan. 22, 2015, not counting rollovers of unshipped commitments at the onset of a marketing year.
Net upland sales the last four weeks have totaled a bulging 1.223 million RB for a weekly average of 305,800 RB, leading some analysts to expect an increase in the export estimate in next weekΆs USDA supply-demand report.
Upland shipments have averaged 228,300 RB, below the weekly average needed to reach the USDA forecast, but recent marketing year patterns have indicated a big shipping season still is ahead.
In a monthly international cotton market review, Cotton Outlook said mill demand for many origins was relatively limited at the higher prices as January came to a close.
International cotton prices during the month broke out of their previous trading range and gained some 5 cents. The Cotlook A Index began the period at the low at 79.65 cents, rose to 84.25 cents and ended at 83.50 cents.
The rise in upland prices was led by New York futures, which in turn were influenced by mill fixations against on-call contracts as well as fund buying rather than physical market fundamentals, Cotton Outlook said.
The perception was that many spinners had secured their most pressing requirements ahead of New YorkΆs rally, Cotton Outlook said. Demand was primarily of a gap-filling nature, it added, with the usual consuming markets placing modest orders for a range of growths.
Futures open interest continued to expand Tuesday, rising 2,435 lots to 276,602, with MarchΆs down 1,073 lots to 152,751 and MayΆs up 1,911 lots to 60,752. Index and hedge funds have been rolling longs from March, selling March and buying May. The total OI is the largest since 2008.
Certified stocks grew 17,876 bales to 153,635, largest since July 2015. First notice day is Feb. 22, now 13 trading sessions ahead. March options expire a week from Friday.
