On the tail of a rally in China's futures market, cotton futures prices on the Intercontinental Exchange (ICE) rose Monday. However, quiet, range-bound activity characterized the market for the rest of the week as traders squared their positions ahead of the New Year’s holiday.

According to data released Wednesday, ICE March cotton futures had risen 18.5 percent in the last quarter of 2009 as tight world cotton supplies prompted buying. USDA now projects world cotton production will fall short of consumption by almost 12 percent in the ongoing 2009-10 marketing year, and U.S. producers hope exports will increase.

Additionally, recent market chatter implies that China’s 2009-10 cotton crop will come in lower than the 31.5 million bales estimated by USDA. Adding credit to the rumors, China, the world's leading cotton producer, importer, and textile producer, now has doubled its import quota for 2010 to curb the rise of cotton prices there and to help bridge a domestic shortfall.

Some in the industry say the announcement of China’s 2010 import quotas rallied ICE futures early in the week and underscored demand expectations as mills sought purchases. However, others believe the increased quota was anticipated, and the market volatility came from traders “squaring positions.”

“It’s not unusual for cot- ton prices to see wild swings between Christmas and the end of the year as thin trading volume exaggerates price moves,” a trader commented.

Meanwhile, U.S. export figures remain strong. USDA reported net export sales of U.S. cotton reached a marketing year high in the week ended December 24. At 349,600 bales, the figure was 64 percent higher than the previous week and 47 percent more than the fourweek average. China, Turkey, Thailand, and Vietnam were the week’s top buyers. Net sales of 5,300 bales for delivery in 2010-11 were for South Korea.

Export shipments of 124,900 bales were up 14 percent from the previous week and 15 percent from the four-week average. Primary destinations included China, Turkey, Vietnam, and Taiwan.

Spot cotton sales also were higher as growers in Texas, Oklahoma, and Kansas sold 33,369 bales online in the three trading days ended Dec. 30. One week before, just 7,976 bales were traded in five trading days. Prices received by producers ranged from 65.04 to 66.35 cents per pound versus 63.50 to 65.18 cents per pound the previous week.

In other news, virtually all of the 2009-10 U.S. cotton crop now is out of the field, and much-needed moisture has been received in most of the nation’s cotton growing regions. The entire Cotton Belt has been showered with precipitation in one form or another in the past two weeks.

Several winter storms have moved across the state of Texas bringing much needed precipitation to South Texas. After severe drought destroyed much of the 200910 crop in South Texas, producers there now are optimistic about planting cotton in the spring after receiving an abundant amount of rainfall in the months of November and December.

“We have a long way to go, of course, but South Texas cotton growers have not been this excited about the upcoming crop since the fall of 2005 when crop conditions were ideal,” said a local analyst. “In my opinion, if we don’t get a single drop of rain from now until planting time, we will still have the opportunity to make a crop.”