ICE Cotton traded slightly higher this week despite the nearby cash market grinding to a virtual standstill. Current crop export sales were just enough to support the market, while the attractiveness of SH 2014 offers at 1000 pts less than current prices helped merchants add to forward sales.
Cert stocks have yet to show a notable increase, although that may happen in greater volume towards mid-April. The market is still waiting for solid policy news to emerge from China, regarding both the release of import quota and the new crop subsidy system.
In general there was little fresh news this week, and the market’s lack of volume reflected this. Futures are due for a reversal, and COT data reflects that specs are increasingly selling the N/Z spread.
In the broader economic arena, Ukraine and tit-for-tat sanctions between the US and Russia continued to dominate the news, as does talk of slowing economic growth in China. The Federal Reserve’s FOMC met this week and continued tapering of $10b per month.
Now that the Fed’s unemployment threshold has almost been reached, the Fed indicated that it will rely instead on a broader range of indicators, as expected. FOMC members expect to raise the policy rate by 1% by end 2015, and another percentage point the following year - pending continued US economic growth, that is.
