After a week of trading lower, cotton futures prices on the Intercontinental Exchange (ICE) pushed to new highs on the heels of a strong export sales report, stronger U.S. monthly consumption figures, and firmer outside markets. The combination of the three was enough to push cotton above resistance that had gathered in the 85 cent area.

"While we were adamant believers in the age-old adage that 'high prices eventually cure high prices,' apparently, cotton prices have yet to get high enough to be cured," an analyst pondered. "Even with the market having risen some five cents during the week represented in Thursday's export sales report, the demand for U.S. cotton still appears insatiable."

The first report released on Thursday was the U.S. Census Bureau's monthly cotton consumption data. While not normally a major market mover, traders were keen to see if demand was dropping off given the concern about the economy slowing. However, the data showed their fears were unwarranted as the bureau indicated that U.S. consumption on a seasonally adjusted annualized basis was up in July to 3.6 million bales. The new figure was higher than the bureau's original 3.49 million bale estimate in June which was upwardly revised to 3.5 million bales in July.

The second item to hit the cotton news blotter was USDA's weekly export sales report. Which, according to analysts, was "another whopper." Net upland sales of 472,600 bales were up six percent from the previous week with Brazil, Thailand, and Indonesia listed as the top three buyers.

At 242,200 bales, the shipment total was comparatively meager. One of the common laments among the trade is the uncertainty of the shipper's ability to actually move the bales according to the schedule by which the merchants have sold the cotton. And with almost six million bales slated to be shipped prior to the end of the calendar year compared to weekly shipments below 300,000 bales, it is easy to join the growing pool of doubt that the cotton actually will be exported on time, an industry observer noted.

In the meantime, crop conditions recently have deteriorated slightly in the U.S. According to the latest USDA reports, the amount of cotton in the good to excellent category has decreased by three percent. The U.S. crop size and quality estimates will be watched carefully in the weeks to come.

An estimated 67 percent of cotton in Texas was in good to excellent condition in the week ended Aug. 22, according to USDA. Sunny, cool weather moved into West Texas this week and, although soil moisture levels were mostly adequate, the region needs more hot weather for the crop to mature. Despite a little cool weather, cotton was reported to be in excellent shape throughout the Texas High and Rolling Plains with plants blooming and setting boils. Cotton producers on the High Plains still are watching and waiting in anticipation of a bumper crop as ginners are making preparations for the possibility of an extended harvest and ginning season. Meanwhile, harvesting and ginning of the 2010 South Texas crop is well underway.

In world news, realistic estimates about the extent of cotton damage due to flooding in Pakistan may not be known until floods have receded and monsoon weather is over in mid-September. However, many in the industry say up to a fifth of the country's cotton crop has been destroyed. The situation hands an opportunity to exporters in neighboring India and China who are eyeing the shortfall.

Indian producers will seek to take advantage of a government decision last week to lift a ban on exports to help meet demand from Pakistan's textile industry. The restriction was imposed in April to keep domestic prices down. Armed with a bumper crop after a good monsoon, Indian groups are expected to begin exporting to Pakistan in October.