Cotton futures traded higher on Thursday but continued to face pressure near resistance areas. May cotton traded about 20 points higher earlier in the session, topping 65.72 cents a pound before backing off highs by the afternoon. Prices have faced pressure this week near technical resistance areas.

Nearby futures have been weaker compared to the deferred months, as muted demand has kept prices from holding onto gains. The new crop December contract has been showing more strength and posted a fresh 8-month high earlier this morning.

The new crop contract could be weighing drought risks in the U.S. ahead of the planting season. The latest drought monitor showed that 88 percent of cotton areas are experiencing drought conditions, compared to just 33 percent a year ago.

Drought and the possibility of lower acreage this year could add some risk premium to the market this spring and summer if global demand doesn’t pull back further.

The USDA’s weekly export sales report showed that cotton sales picked up slightly last week. During the week ending March 5, sales totaled 289,800 bales for both marketing years. Total export commitments rose to 9.16 million bales, down 12 percent from the previous year.

Weekly exports had picked up from their seasonal lows last week. Shipments will be important over the next couple of months in order to reach the USDA’s target.

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PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. FUTURES TRADING INVOLVES SUBSTANTIAL RISK AND IS NOT SUITABLE FOR ALL INVESTORS.