This week, the cotton futures market in Australia propelled to an 18-month high with prices showing above 73 US cents per pound for October contracts. This has excited cotton growers in the country. Commodity advisor and cotton analyst Matthew Leeson, of Independent Commodity Management (ICM) observed that the price of cotton had been rising but several factors that happened this week caused the market to surge.

According to him, they were a little bearish on the price on a US basis following the June 30 planted acreage report in which they increased 600,000 acres above the expectation (which is around a million bales in round numbers). That was a little depressive for the market. But a number of fundamental and technical factors then changed the landscape and caused the increase in prices. He further added that the weather in Texas has changed with a forecast of warmer conditions. Now, they're looking for some rain.

Leeson goes on to say that then by the turn of the day, the US Department of Agriculture monthly supply and demand update played havoc with a few of the numbers specifically on the global scene where they actually boosted Chinese consumption for old and new crops by a million and a half bales. This has got this market rolling. However, he said that it was too soon to call the price increase, a trend. The Australian dollar, which has remained steady at around 75 cents US, has taken the edge of the futures market rally for the Australian cotton crop, all of which is exported. Currently, conditions are such that the mills have backed away, making the physical side of the market to diminish.