Closing at the highest levels in five days, cotton futures prices on the Intercontinental Exchange (ICE) Thursday were encouraged, in part, by strong economic growth in China.

China reported year-on-year growth in gross domestic product of 11 percent. Strong economic growth, in turn, fore-shadows strong demand for commodities. Also on a positive note, U. S. retail sales last week exceeded expectations across the board from high end to chain stores. The retail sales numbers help validate the unusually upbeat tone coming out of the yarn sector recently. Evidence has suggested that mills in China and many other parts of the world are starting to turn a profit even at the current cotton price levels.

Cotton demand has rebounded with expectations for an economic recovery. Textiles are among the first purchases consumers put off in hard times but also among the first to be bought when budgets allow. In the marketing year ending July 31, world cotton consump-tion is projected to outpace production by 14 percent, according to USDAdata.

"We're just waiting for something major to shift in the market fundamentally to give the market some direction again," a trader explained. In the meantime, analysts said they expect the sideways trading trend to continue.

Traders will continue to watch weather in the U.S. cotton growing areas for cues on spring planting conditions. An expected 15 percent increase in 2010 cotton acreage is setting a more bearish tone for the December contract which represents the new crop.

USDA reported six percent of the U.S. cotton crop was in the ground as of April 11, up four percent from the previous week but lower than the nine percent average.

Planting in South Texas is moving along at a rapid pace as recent weather has allowed growers to drop seed in the ground without any major disruptions. Rain on the young cotton plants in the region was welcome this week. Storms also moved across the West Texas plains this week bringing significant rainfall to the region and improving soil moisture across irrigated and dryland acres that have yet to be planted. Toward the end of this month, planting should commence in the western part of Texas, weather permitting. Prospects for a good start continue to look promising.

In other news, USDA's export sales and shipment figures were considered to be constructive this week. Sales were better than expected while shipments were lower. During the week ended April 8, net U.S. upland sales for the current season were strong at 280,300 bales, the highest weekly total since the week ended Feb. 11. The top three buyers for the week were Turkey, Taiwan, and Bangladesh. Net sales of 49,100 bales for delivery in 2010-il were mainly for Indonesia.

"Export sales, a healthy 280,300 bales sold to 19 different destinations last week, continued to reflect continuing demand for cotton regardless of price level," a trader said.

Shipments of upland cotton were the slowest since the week ended Feb. 4, at 187,100 bales. China, Turkey, and Indonesia were the primary destinations. Traders now say export shipments must total 4.6 million bales in the next 16 weeks to reach USDA's estimate for the marketing year. Therefore, shipments need to average roughly 285,000 bales per week. It is completely possible to ship cotton at that pace. In fact, one year ago 4.9 million bales were shipped during the same period. Spot cotton sales were slightly lower as growers in Texas, Oklahoma, and Kansas sold 1,271 bales online in the week ended April 15 compared to the previous week when 1,991 bales were traded. Prices received by producers ranged from 60.50 to 75.75 cents per pound versus 65.91 to 75.20 cents per pound one week earlier.