Despite volatile trading, ICE Cotton futures settled only slightly higher this week at 93.74 c/lbs basis the K4, and not much change is seen in the overall open interest. The week opened down sharply on Monday, followed by a 350 pts gain on Tuesday.

The industry pegged the jump on the USDA’s final ginning report that showed 13/14 production almost 300k bales lower than its WASDE estimate, but this was hardly new news to the trade.

The jump in the market encouraged by the report release led the May contract to hit buy stops posted above the 9375 double top, and the contract locked the exchange allowed 4 cent limit for a brief moment.

Adding to the volatility was news from China, which can be read as bullish or bearish depending on your slant. First, the reserve selling price will be lowered, and new crop will see direct farmer subsidies rather than a minimum support price – this is bearish for international values.

At the same time, from April, reserve sales will allow the issuance of 4:1 quota, and additional processing quota is likely. Since US supplies are tight, on paper at least, this is supportive. The one certainty, though, is that unsold cotton will find its way towards the board at current levels.