Cotton prices on the Intercontinental Exchange (ICE) rose Thursday as export sales data indicated continued strong demand for the developing U.S. cotton crop was taking the earliest available supplies off the market. Despite ex-pectations for a bumper harvest in the fall, traders anticipate the availability of cotton fiber will remain low for quite some time.

Cotton prices have rebounded with textile demand as the economy recovers from recession lows. Though the United States is expected to yield 50 percent more cotton this year, much of the initial harvest has been sold. Amarket observer explained that traders now are willing to pay more for earlier cotton futures than for deferred contracts which is contrary to typical market behavior. For the time being, October cotton futures on the ICE are "inverted," or trading higher than December. The December contract also is stronger than March.

"An inverted market like we have this week is a sign of strong nearby demand," an analyst explained. "Crop progress reports indicate harvest may begin early in the U.S., though there's speculation that marketing channels still will be empty in November."

U.S. exports this fall already are shaping up to be large relative to previous years. "Almost 5.75 million bales are sold for the short term, which implies that over one-third of this year's crop is already sold," a National Cotton Council (NCC) analyst said this week.

"If we see any stability of the U.S. economy going into the first quarter of 2011, cotton supplies could continue to be tight when the pipeline needs to start filling up again, and this should be supportive of prices," said the economist. "Although many factors will come into play between now and this fall, the supporting factor will be the tight supply in the U.S. and world; not just cotton stocks, but yarn stocks," he concluded.

Though USDA data released Thursday showed both cotton exports and sales decreased from the week before, the volumes still were considered strong for this point in the season.

Net export sales of U.S. cotton for delivery in 2009-10 were a marketing year low of 600 bales as purchases by Thailand, Bangladesh, and Hong Kong were offset by cancellations from Brazil, China, and Turkey. Net sales of 2 15,700 bales for delivery in 2010-11 were mainly for China, Turkey, and Brazil.

Export shipments of 303,500 bales were down nine percent from the previous week but up six percent from the fourweek average. Primary destinations were China, Turkey, and Mexico.

As for any other cotton specific news, topics ranged from a slight slowdown in export inquiry as a result of the market's recent gains to stories of some welcome showers across parts of the southeastern U.S. and northern Delta regions.

The U.S. crop continued to hold on to its historically high crop condition ratings as of July 22 with only a slight increase in the percentage of the crop rated in very poor to poor condition noted. The report placed the crop at 68 percent in excellent condition, 24 percent fair, and eight percent poor to very poor. Crop maturity, a potentially major factor for traders considering the inversion of the December/ March futures contracts, remained ahead of normal with 94 percent of the crop squaring which is above the five-year average of 87 percent. In addition, the percentage ofU.S. cotton acreage setting bolls also is running ahead of average with 58 percent setting bolls versus the48 percent fiveyear average.