ICE cotton futures exploded from a near- to medium-term consolidation phase to finish the week with the July and Dec contracts gaining 240 and 98 points, respectively. The Dec contract finally broke through – and closed significantly above – the 80.00 level, which is technically bullish; ditto for July in making new contract highs. The old crop/new crop straddle strengthened considerably to 633.
Trading on the ICE this week lacked the sporadic weakness seen over the last fortnight, with the aforementioned surge the greatest defining point of the week. We think that anticipation of significantly lower projected US ending stocks for the current marketing year and a significantly to much lower projection of both world aggregate and domestic 2018 production (Vs figures put forth at the annual Ag Outlook Forum in Feb) were the largest factors behind the market’s late week strength.
The USDA will release the May WASDE report on Thursday, May 10 at 12:00 PM, ET. The May report contains the initial official balance sheet for the new crop.
Demand for US cotton for export continued to be seasonally strong for the week ending April 26, despite total net sales against the current marketing year being off significantly Vs the previous sales period at approximately 201K running bales. Shipments were higher Vs figures put forth last week at 445K RBs. Shipments continue to eclipse the weekly pace required in order to match the USDA’s revised 15M bale export target. Total sales against 2018/19 were again large at nearly 300K running bales; sales against 2018/19 currently stand at a running total of approximately 3.8M 480lb bales.
