February 3, 2005

Despite a weekly export sales report that showed an impressive new marketing year high, analysts said commodity funds and locals were more interested in selling, causing cotton futures on the New York Board of Trade to settle sharply lower Thursday.

USDA reported net export sales of U.S. cotton in the week ended Jan. 27 totaled 373,100 bales, 51 percent more than the previous week and 55 percent better than the four-week average. The major buyer was China with 131,800 bales followed by Indonesia and Turkey with acquisitions of 45,900 and 33,200 bales, respectively. Sales of 14,000 bales for delivery in 2005-06 were mainly for South Korea.

Export shipments of 249,000 bales were nine percent more than the previous week but two percent lower than the four-week average. Turkey, with 47,100 bales, was the primary destination. Mexico followed with shipments of 36,700 bales, and South Korea rounded out the list of the week’s top three destinations with 31,300 bales.

Traders said the market was slowing down on Thursday both in anticipation of the Chinese New Year celebration and in response to three days of rising cotton futures prices.

“The cotton market is experiencing a difficult time with the rolling of positions from March to May and the start of the Chinese New Year next week,” a cotton market observer said. “Furthermore, the Chinese will be mostly absent from the market during the New Year holiday that begins Feb. 9 and lasts for two to three weeks, so we’ll probably see very little business.”

In spot cotton news, Texas, Oklahoma and Kansas producers sold 22,673 bales online in the week ended Feb. 3 compared to the previous week when 30,576 bales were traded. Prices received by producers selling their cotton online ranged from 33.70 to 35.03 cents per pound versus the previous week’s range of 35.69 to 36.88 cents per pound.

In other news, the International Cotton Advisory Committee (ICAC), released its latest monthly assessment of the global cotton balance sheet. The changes were widely anticipated and pre-empted by USDA’s figures in mid-January. The committee increased its world production estimate by 1.6 million bales due, in part, to a one million bale increase in Pakistan and a 200,000 bale boost in the United States. World cotton consumption gained 600,000 bales of which 500,000 originated from China. Carryout stocks grew by 900,000 bales.

ICAC increased its 2005 estimate for world production 1.5 million bales from its previous report. Consumption also was bumped up 700,000 bales, and ending stocks grew to 46.5 million, up 1.7 million bales. The 46.5 million-bale carryout is down only one million from the current season despite a sharp drop in output.

Meanwhile, many gins on the Texas High and Rolling Plains found themselves further behind as rain and snow fell in the areas this week. The precipitation halted the retrieval of modules from fields and slowed ginning operations. The showers, however, were welcome in the Texas Rio Grande Valley this week. Seedbed preparation for the upcoming season already has been completed there, and the timely rainfall will help improve subsoil moisture levels.