The cotton market closed slightly higher Wednesday, but only squeaked out the gains in the end of the session. Volume was very light again, which has been the case for the last week as traders are in holiday-mode.
The trading range for the session was only a little over 100 points, with the majority of time spent in a closer 60-point range. Prices were down much of the day, but rallied from their midmorning low.
March added 4 points to end at 86.84 cents and May was up 2 points at 86.66 cents.The lack of resolution to the EU debt crisis has weighed on cotton the last few weeks, and we expect this to continue. World cotton supplies are forecast to increase 27% to 57.67 million bales as production exceeds demand. Until the demand outlook picks up cotton prices will remain weak, as prices have fallen despite supportive news. Last week China announced that its acreage will likely decline 9 percent in 2012. The cutback in acreage is expected to be in the major production regions and is reportedly due to the pullback in prices compared to last year. We are expecting lower plantings in the U.S. as well, around 7 percent.