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
OA Cleveland
Market Analysis

Cotton Prices Itching to Move Higher, as Growers Ponder Acreage Shifts

March 27, 2015

The market has shown it is comfortable with higher prices, as planting and production dynamics hold the potential for larger than expected U.S. cotton plantings.

Market Analysis

Cleveland: Market on Path to Higher and Higher Lows

March 20, 2015

Cotton prices bounced back in response to the time-honored adage, “low prices cure low prices.” But there are still a few bumps and curves along the way.

Market Analysis

Shurley on Cotton: March Madness as Prices Tumble

March 16, 2015

Thus far, March has not been kind to the cotton market.

Market Analysis

Plexus: Is the Worst of the Selloff Behind Us?

March 13, 2015

The cotton market seems to be regaining its footing, and trade buying is starting to resurface. This leads us to believe that the worst of this selloff may be behind us.

Market Analysis

Plexus: Market Momentum Continues to Stall

March 10, 2015

Market momentum has clearly been stalling. Physical business needs to pick up, but the latest wave of buying may be over for now.

OA Cleveland
Market Analysis

Cotton Market Sliding Along with No Drastic Moves

March 6, 2015

Much like the icy conditions across the Cotton Belt, prices have slid back and forth and sideways, as the price charts remain void of any drastic activity.

Market Analysis

Shurley on Cotton: Not Surprisingly, Market Improvement Slows Down

March 2, 2015

The market is still full of uncertainties, and this recent slowdown might just be a signal that the market needs to take a breather.

Around The Gin
Product News

New 2015 CROPLAN Cotton Varieties Feature Bollgard II XtendFlex Technology

March 19, 2015

WinField is adding Monsanto’s new Bollgard II XtendFlex cotton trait to two new CROPLAN cotton varieties for 2015.

Precision Technology

New Features for TeeJet Aeros 9040 Field Computer

March 18, 2015

TeeJet has added new features to its Aeros 9040 Field Computer for 2015.

Precision Technology

TeeJet Launches New DynaJet Flex Nozzle Control System

March 17, 2015

The new DynaJet Flex 7120 nozzle control system from TeeJet Technologies helps growers manage spray quality across a variety of operating speeds and application rates.

Product News

New Cheminova Chemistry to Help Control Herbicide Resistant Weeds

February 23, 2015

Cheminova plans to register pethoxamid, a new herbicide active ingredient, to help growers manage herbicide-resistant weeds.

Product News

Brake Herbicide Receives Section 18 Approvals in Six States

February 18, 2015

Brake Herbicide has received Section 18 emergency use exemptions for control of glyphosate-resistant Palmer amaranth in six cotton producing states.

Precision Technology

TeeJet Matrix 430 Provides Simple, Easy-to-Use Guidance

February 18, 2015

TeeJet Technologies’ new Matrix 430 GNSS guidance system is ideal for a wide range of field applications.

Precision Technology

TeeJet Launches RX520 High-Precision GNSS Receiver

February 17, 2015

TeeJet Technologies has introduced the RX520 dual frequency GNSS receiver for precision farming operations.

Disease Control / Nematodes

Velum Total Approved for Cotton, Peanuts in 2015

February 12, 2015

Bayer CropScience has received registration for Velum Total, a new insecticide/nematicide for use in cotton and peanuts in 2015.

Latest News
Market Analysis

Cotton Prices Itching to Move Higher, as Growers Ponder Acreage Shifts

March 27, 2015

The market has shown it is comfortable with higher prices, as planting and production dynamics hold the potential for larger than expected U.S. cotton plantings.

Market Analysis

Cleveland: Market on Path to Higher and Higher Lows

March 20, 2015

Cotton prices bounced back in response to the time-honored adage, “low prices cure low prices.” But there are still a few bumps and curves along the way.

Market Analysis

Plexus: Market Bumps on Weaker Dollar and U.S. Supply Questions

March 20, 2015

While most commodity prices turned lower again, cotton rallied a bit, thanks to a constructive U.S. export sales report. But the big question going forward is how many tenderable grades are left in the U.S.?

Market Analysis

Shurley on Cotton: March Madness as Prices Tumble

March 16, 2015

Thus far, March has not been kind to the cotton market.

Market Analysis

Dull Trading Likely in a Stumbling, Mumbling Market

March 16, 2015

After losing its prior month gains in one week, the cotton market was left stumbling and mumbling. We are now likely in for a month – maybe two – of dull trading.

Market Analysis

Plexus: Is the Worst of the Selloff Behind Us?

March 13, 2015

The cotton market seems to be regaining its footing, and trade buying is starting to resurface. This leads us to believe that the worst of this selloff may be behind us.

Market Analysis

Plexus: Market Momentum Continues to Stall

March 10, 2015

Market momentum has clearly been stalling. Physical business needs to pick up, but the latest wave of buying may be over for now.

Market Analysis

Cotton Market Sliding Along with No Drastic Moves

March 6, 2015

Much like the icy conditions across the Cotton Belt, prices have slid back and forth and sideways, as the price charts remain void of any drastic activity.

Market Analysis

Shurley on Cotton: Not Surprisingly, Market Improvement Slows Down

March 2, 2015

The market is still full of uncertainties, and this recent slowdown might just be a signal that the market needs to take a breather.

Market Analysis

Quality Continues to Drive Cotton’s “Joyful Ride”

February 21, 2015

Cotton’s joyful ride continues, as prices have pressed the 65 cent level, driven by demand for quality machine harvested cotton.

Market Analysis

Plexus: Time for the Market to Rest and Regroup?

February 20, 2015

Look for the market pull back a bit and regroup over the coming weeks. But don’t worry. It’s just taking a breather.

Market Analysis

Plexus: Buying Pressure Should Keep Cotton Moving Up

February 18, 2015

Buying pressure over the coming months should help maintain the current upward move for cotton.

Market Analysis

Market Faces Long and Crooked Row to Higher Prices

February 17, 2015

The market has a very long and crooked row to hoe on its path to higher prices. However, it is sending multiple signals that the 57 cent resistance level did hold, and prices can now begin to ease higher.

Market Analysis

Shurley on Cotton: Upward Progress Finally Being Made

February 11, 2015

Prices should be nearer the bottom end of their likely range. If you’re going to plant cotton in 2015, be patient and wait for possible rallies this summer.

Market Analysis

Plexus: Market in Perfect Shape for a Short Squeeze

February 10, 2015

Since starting to move higher, the March contract has gained more than 450 points and has moved through some key resistance levels. Buyers are now firmly in control of the market.