April 17, 2008

Cotton futures on the New York Board of Trade settled lower most of the week and continued to fall on Thursday as another round of investor sales followed Wednesday’s weak close. Some observers feel that further tumbles in the immediate future may be limited by trade and consumer buying in the market.

“The recent weakness of both cotton prices and the U.S. dollar has made the market even more affordable to overseas buyers,” an analyst explained. “As more mills are buying hand-to-mouth, we hope to see an increase in U.S. cotton sales.”

Meanwhile, USDA reported net export sales of U.S. cotton totaled 134,500 bales in the week ended April 10. The figure was 72 percent lower than the previous week and 60 percent less than the four-week average. Major buyers were China, Turkey, South Korea, and Thailand. Net sales of 3,100 bales for delivery in 2008-09 were for Indonesia and South Korea.

Export shipments of 283,700 bales were up three percent from the previous week and 23 percent from the four-week average. Primary destinations were China, Mexico, Turkey, and Thailand.

“The weekly export sales report was no thing of beauty,” one analyst remarked. “However, given the recent pricing pattern, no one was really looking for a whopper anyway. In fact, this kind of report sure supports the market’s expectations of the largest U.S. carryover since 1966.”

In the spot cotton market, online trading by producers in Texas, Oklahoma, and Kansas also were lower as 7,895 bales were sold in the week ended April 17 compared to 15,216 bales the previous week. Average prices received by producers ranged from 60.00 to 65.11 cents per pound versus 60.25 to 63.80 cents per pound one week earlier.

In other news, market observers are keeping an eye on weather conditions as the new U.S. cotton crop is being planted. A strong cold front entered the Far West this week, ending a period of unseasonably warm weather. Daytime highs only reached the 60s in the California San Joaquin Valley, and gusty winds were reported. However, planting continued with little interruption.

In Arizona, open conditions allowed outside activities to continue at a rapid pace. Planting expanded in the central parts of the state, and if good weather holds, work likely will be completed by the end of the month. In Yuma County, the young crop is developing satisfactorily under the hot, sunny weather.

On the Texas High and Rolling Plains, fieldwork continued this week as a strong wind blew and producers continued to pray for rain. Wind gusts of 50 miles per hour were reported, and blowing dust slowed field operations. A slow-soaking rain is urgently needed to help settle the dust and to improve topsoil moisture levels. Where possible, growers have started pre-planting irrigation to ensure adequate moisture for proper seed germination. Elsewhere in the state, planting activities expanded in the Upper Coastal Bend under clear skies. Soil conditions have been conducive for good seed germination, and emergence is expected soon on some of the earlier-planted fields.