facebook_pixel

Cleveland: Strong U.S. Exports Bolster Cotton Market

Cotton prices eased higher near week’s end as Thursday’s rally brought the nearby March back above 86 cents.  The week was highlighted by strong U.S. export sales, the firming of Indian prices, ideas that the US crop is not as large as forecast by USDA and increased talk of weather problems facing the 2014 crop. The expected volatility returned somewhat to the market, and don’t be surprised to see more and more three digit daily moves. The mill on-call sales remain well ahead of on-call purchases, and mill fixations this week prevented an attempt by the market to force prices below 84 cents. That support should continue throughout the spring trading months.

Export sales tallied 179,800 RB of Upland on the week for the current marketing year and another 35,600 RB for the 2014/15 season. Export sales during January were near 1.5 million bales, well above expectations. Sales of cotton for both this season and next, including Pima, totalled near 1.75 million bales. Too, a large portion of the sales appeared to be on- call, thus adding to the necessity for mills to buy futures during the coming months either on the March, May or July contracts to fix the price of the respective sales.  Equally impressive as the volume of sales during January was the wide range of countries looking to buy cotton from the U.S. This distribution underscores the need for machine picked cotton desired by mills and the fact that the availability of cotton for exports (outside China) is extremely tight now that both Brazilian and Greek supplies are essentially gone. There remains high quality West African supplies, but the smaller than expected Indian crop, the surprising strength of Turkish demand, and the recent surge of demand from Indonesia, the demand for U.S. supplies is firmly embedded as one of the primary factors supporting the market.

In fact, while I have been lobbying USDA for months to increase its estimate of U.S. exports, it seems a foregone conclusion that the agency will have to in next week’s February supply demand report. Granted, and in defence of USDA, they have been reluctant to reduce U.S. ending stocks below 3.0 million bales, it now becomes necessary for them to reflect the even tighter availability of quality U.S. cotton available for export. Export sales and shipments have now reached nearly 9.2 million bales 480 pound bales. This is also supported by the aforementioned idea that the total U.S. crop is smaller than currently forecast (crop size is not expected to be lowered in next week’s report).

The National Cotton Council will release its plantings survey, traditionally the first objective survey of the year. My long time estimate has been 11.1 million acres while the Beltwide estimate was about 10.8 million acres. I could be 100,000 acres low; but nevertheless, this will be the first increase in plantings in three years.

The 84 cent level will likely continue as support while the 88 cent mark holds the resistance, but with a bias higher. Yet, for now, mill buying will still stagnate at 87-88 cents, but fixations will be strong below 84 cents.

Topics:

Leave a Reply

Market Analysis Stories
Market Analysis

Was USDA Right? U.S. Crop Looking Bigger.

August 18, 2017

The U.S. crop is signaling that it is getting bigger. With nothing more than a good fall, the crop could climb as much as a million bales more than USDA’s August surprise estimate.

Market Analysis

USDA Report Stuns Market. Now, Wait for Reality.

August 14, 2017

USDA stunned the market with its August estimate of U.S. cotton production. But remember – history has shown consistent deviation between mid-summer estimates and final harvest realities.

Market Analysis

Technically Speaking, Pay Attention to Fundamentals

July 28, 2017

With prices holding in a three-cent range, it’s likely time to pay attention to what the market fundamentals and technicals are telling us.

Market Analysis

December Futures Prices? Ask Mother Nature.

July 23, 2017

Opinions differ on where December futures prices may go. But there’s no doubt that Mother Nature holds the key to forthcoming price activity.

Market Analysis

With Market Oversold, Is Bullish Return Near?

July 14, 2017

The cotton invert continues, as both the U.S. and Australian crops are oversold.

Market Analysis

Shurley: Prices Continue to Flounder in Lower Range

July 14, 2017

The July USDA crop production and supply and demand estimates report was not bad, but prices continue to show no improvement.

Market Analysis

Rain in India, U.S. Keeps Pressure on Prices

July 7, 2017

Beneficial rains in the U.S. and India kept pressure on cotton prices, as the December futures contract settled the past week unchanged.

Around The Gin
Product News

Maximizer Club Honors Top FiberMax Dryland Growers

August 17, 2017

The FiberMax Maximizer Club honored 121 growers who yielded at least 1,000 lb/A on dryland acres with FiberMax varieties in 2016.

Product News

Monsanto, Valent Expand Roundup Ready PLUS Partnership

August 7, 2017

Monsanto and Valent U.S.A. are expanding their crop protection partnership for the 2018 Roundup Ready PLUS Crop Management Solutions platform.

Product News

New Broadleaf Burndown Option Coming from Dow AgroSciences

July 31, 2017

A new burndown option for tough broadleaf weeds has shown excellent promise in trials across the Mid-South and Midwest.

Product News

Protect Cotton Potential from Weeds, Worms and Diseases

July 12, 2017

Southeast cotton producers say latest technologies from PhytoGen help protect yield and quality.

Product News

Monsanto “Troubled” by Arkansas Dicamba Decision

June 26, 2017

Monsanto has weighed in on the Arkansas Plant Board’s proposed ban of dicamba use in the state.

Product News

Drexel Adds Two Regional Sales Reps

June 16, 2017

Kyle Herring and David Davis have joined Drexel Chemical Company as regional sales representatives.

Product News

Dow AgroSciences Launching Enlist Corn in 2018

June 16, 2017

Following the launch of Enlist cotton, Dow AgroSciences will make Enlist corn commercially available for 2018 after receiving Chinese import approvals.

Product News

Transform Earns Section 18 Exemptions for Cotton, Sorghum

May 4, 2017

Transform WG insecticide has received Section 18 emergency use exemptions for use in cotton and sorghum in select states for the 2017 production season.

Latest News
Market Analysis

Was USDA Right? U.S. Crop Looking Bigger.

August 18, 2017

The U.S. crop is signaling that it is getting bigger. With nothing more than a good fall, the crop could climb as much as a million bales more than USDA’s August surprise estimate.

Market Analysis

Shurley: So Much for 18 Million Bales and Higher Prices

August 14, 2017

If USDA’s September numbers still validate a 20+ million bale crop, prices could slide. If not, the 68-70 cent level – or better – should hold.

Market Analysis

USDA Report Stuns Market. Now, Wait for Reality.

August 14, 2017

USDA stunned the market with its August estimate of U.S. cotton production. But remember – history has shown consistent deviation between mid-summer estimates and final harvest realities.

Market Analysis

Production, Weather Woes Boosting Market

August 4, 2017

Mother Nature’s recent Texas outburst was rough on cotton fields. But it was enough to boost prices back into the 70s.

Market Analysis

Technically Speaking, Pay Attention to Fundamentals

July 28, 2017

With prices holding in a three-cent range, it’s likely time to pay attention to what the market fundamentals and technicals are telling us.

Market Analysis

December Futures Prices? Ask Mother Nature.

July 23, 2017

Opinions differ on where December futures prices may go. But there’s no doubt that Mother Nature holds the key to forthcoming price activity.

Market Analysis

With Market Oversold, Is Bullish Return Near?

July 14, 2017

The cotton invert continues, as both the U.S. and Australian crops are oversold.

Market Analysis

Shurley: Prices Continue to Flounder in Lower Range

July 14, 2017

The July USDA crop production and supply and demand estimates report was not bad, but prices continue to show no improvement.

Market Analysis

Rain in India, U.S. Keeps Pressure on Prices

July 7, 2017

Beneficial rains in the U.S. and India kept pressure on cotton prices, as the December futures contract settled the past week unchanged.

Market Analysis

Shurley on Cotton: Where Did the Acres Go?

July 6, 2017

Dr. Don Shurley says the recent USDA Planted Acreage report did not deliver as expected, making times a bit confusing for producers looking to manage risk.

Market Analysis

Bulls Push Market on Heels of USDA Planting Report

July 5, 2017

Smaller than expected U.S. cotton plantings – and the potential smaller crop – caught the bulls’ attention in the market.

Market Analysis

Market Catching Its Breath After 10-Day Slide

June 23, 2017

After an unprecedented 10-day drop in prices, the market is trying to catch its breath.

Market Analysis

Mother Nature, Not Bulls, Managing the Market

June 16, 2017

Cotton prices took a big hit, and bullish signals are hard to find. Mother Nature is now in charge.

Market Analysis

Shurley: June Report Sends Mixed Signals

June 15, 2017

USDA’s June WASDE report contained some good news and some bad news. Overall, Dr. Don Shurley considers the report somewhat bearish.

Market Analysis

Report Softens Prices, Consumption Concerns Rise

June 9, 2017

USDA’s June WASDE report sent old crop and new crop prices lower at week’s end, as manmade fibers take aim at cotton.