Spot contract remained within overnight trading range. Federal Reserve officials expected to raise short-term interest rates, minutes of May meeting revealed. Traders awaited USDAΆs weekly export sales report.
Cotton futures settled higher Wednesday, underpinned by suspected mill fixations, after spot July had fallen as much as 1,008 points from the contract high set eight sessions ago.
July closed up a modest 32 points at 77.54 cents, in the lower third of its 162-point range from down 12 points at 77.10 to up 150 points at 78.72 cents. It posted the low — even with the prior-session low — about 90 minutes 90 minutes into the overnight session, touched the high in the wee morning hours and traded back and forth into the close.
December settled up 71 points to 73.08 cents, snapping a four-session losing streak and finishing near the high of its 88-point range from 72.25 to 73.13 cents.
Federal Reserve officials expected at their policy meeting earlier this month that it would “soon be appropriate” to raise short-term interest rates once again, according to minutes of the gathering, Dow Jones Newswires reported late in the cotton session.
This was viewed as a signal the central bank could lift its benchmark rate at its next gathering in June. Cotton showed little reaction to the news, while U.S. dollar index futures initially weakened and then bounced but was still down 0.2% just after the cotton close.
Volume was estimated at 30,203 lots, compared with 30,560 lots the prior session when spreads accounted for 9,335 lots or 31%, block trades 312 lots and EFP 243 lots. Options volume increased to 7,616 lots (2,390 calls and 5,226 puts) from 6,300 lots (1,552 calls and 4,748 puts).
Traders awaited USDAΆs weekly export sales report, scheduled for release at 7:30 a.m. CDT on Thursday. Upland sales cancellations for this season are expected to exceed the prior weekΆs 61,600 running bales and possibly even top new sales. This may have helped to keep a lid on WednesdayΆs rally.
The report will be for the week ended May 18, a period when July traded in highly volatile swings and futures volume surged to an all-time high daily volume with a huge options turnover.
All-cotton export commitments for shipment this season stand at just over 101% of USDAΆs 2016-17 export forecast. A year ago, commitments were 96% of final shipments.
Net upland sales for the last four reporting weeks have averaged 137,300 RB a week and upland shipments have averaged 365,100 RB, well above the pace needed to reach the USDA estimate. Those figures compare with averages for the prior four weeks of 298,900 RB and 409,500 RB, respectively.
Futures open interest fell 5,255 lots Tuesday to 251,732, with JulyΆs down 5,124 lots to 106,085, DecemberΆs down 794 lots to 119,133 and MarchΆs up 647 lots to 14,038.
Certified stocks grew 2,680 bales to 411,726. There were 3,997 newly certified bales and 1,317 bales decertified. Awaiting review were 1,671 bales, 264 bales at Galveston and 1,407 bales at Memphis.
