That is the highest since mid-June and the biggest for the 2012/13 marketing year so far. The season started on August 1. "The large export sales caught the market by surprise and the market rallied," said a US broker. The most-active March contract on ICE Futures US settled up 0.51 cent, or 0.70 percent, at 73.55 cents per lb, in the middle of the day's trading range of 72.85-73.95 cents. Trading volumes were well below average, with just under 10,000 March lots changing hands on the day. The gains weren't enough to break the market out of its recent 70-74 range either.
According to the data, China, the No 1 textile market, bought 254,600 bales, including 1,100 switched from South Korea and decreases of 21,000, with Turkey in second place with 61,500 bales. Vietnam took 16,200 bales and Pakistan 14,600. The purchases may boost hopes among growers and merchants that Chinese mills are prepared to pay slightly higher prices and their appetite might be stronger than expected.
In the week covering the data, prices ranged from 71.28 cents to as high as 73.98 cents. That is higher than the week to November 15 when sales set the previous 2012/13 record. Sales were just shy of 400,000 running bales as prices fell below 69 cents. With the Beijing buying fibres from local farmers at prices double this level, it is hard for the mills to compete. The purchases by the state reserve are part of a plan to support farming in the country.
Those high prices paid by the government forces mills in China to source abroad and fork out stiff import duties to do so, hurting their margins. There are also signs they are buying more yarn, a semi-processed material, to avoid the import taxes. On its last day, December expired without a whimper. Only 8 lots were traded, with prices rising 0.2 cent to 72.24 cents per lb.
Certified stocks rose again hitting 88,997 bales, hitting fresh four-and-a-half month highs. On Wednesday, stocks rose to their highest level since July 18. Almost 30,000 bales were awaiting review, according to exchange data for December 6. Fibres' gains eked out gains in stark contrast to grains market which fell after a weaker-than-expected export sales report. Other commodities remained under pressure as investors remained jittery about the fragile euro-zone economy and amid a stalemate in the US budget talks.