facebook_pixel

“Dramatic” Market Difficult to Nail Down

A new current move up topped out above 97 cents in what was little more than panic trading, as this week’s trading range was a rather wide 800 points. One is tempted to call this a roller coaster, but that phrase does not conjure up enough drama for the current market.

The usual dose of what’s going in China, the speculative community salivating at the mention of cotton, and textile mills dancing everywhere in the market – both highs and lows – seem to be behind each trade. Throw in a full diagnosis of mad cow disease, and one pretty much can nail the cotton market.

The difficulty is placing the nail. It is somewhere between 89 and 98 cents. My 12-year-old son can come closer, but I can’t.

Nevertheless, at this stage in the marketing year, my expectations are that prices will trend lower. That is not a typo. The word from me has always been higher, but now I am using that bear word “lower.” But there will be no rush lower, just a tendency to move lower, since the mills have yet to work out of their massive bullish mill call sales. Recall, I just commented that another run to 98 cents could easily be in the works, and likely is. But it will be quick and over in a flash. The bull is very, very fat.

With all this action, the new crop December stood still at 79-80 cents. The old crop bullishness has not been able to bring December along the same path. As has been stated several times, I am not giving up on December, rather it will take some abnormal weather events to move it higher. The trading range for the coming two months should be between 81 and 76 cents, a rather narrow six-cent range.

The first indicator will actually come when USDA releases its March 30 plantings intentions. The annual report will be based on market and agronomic conditions as of March 1, however, it is viewed as a principal indicator of actual plantings. The industry range is from 11.5 to 10.8 million acres. The 11.2 to 11.5 million acre estimate appears forthcoming.

USDA released it final ginnings report of the year, indicating that 12.87 million bales were ginned, not the 13.2 million that USDA estimates had used. The market was expecting such a report, and it likely helped provide some of the spark in this week’s move higher. Yet, as with expectations, its price benefit immediately wore off.

Yet, this does indicate that U.S. ending stocks will likely range from 2.4-2.6 million bales, a very low number. In fact, with stocks below 3.5 million bales, the market will be somewhat fixated on new crop weather and agronomic conditions as the growing season progresses. The current forecast for the 2014 U.S. crop is 16.1 million bales. Yet, an unkind Mother Nature can easily reduce that to 13 million bales and open the door for the new crop December to jump to 85 cents and higher.

Export sales, while not booming, continue to be respectable with market prices above 90 cents. However, it must be recognized that the U.S. has little cotton available. Foreign mills are still somewhat uncovered for both third and fourth quarter needs, and this will keep pressure on prices. Yet, the Indian crop has met with a very wide and favorable response from the Asian textile industry, especially China. Thus, that acts to keep old crop prices somewhat under control.

We are set for the upcoming Lubbock Gin Show. Maybe I can take some rain with me. Volatility is the key, and the market will be jumping. This market needs more cotton!

Topics:

Leave a Reply

Market Analysis Stories
Market Analysis

Shurley: Demand Is Key to Price Strength and Stability

November 21, 2017

Demand is the key to cotton's future. We still have a way to go, but the outlook has certainly improved.

Market Analysis

Cleveland: Yields, Quality, Consumption Still Rising

November 4, 2017

Reports of high yields, premium quality and growing consumption are keeping prices at the higher end of the trading range.

Market Analysis

India and Frost Combine to Prop Up Market

October 27, 2017

India’s plan to keep more of its cotton for domestic use, plus a potential freeze in West Texas, propped up the market during the past week.

Market Analysis

Bears Growling on Harvest and Demand Challenges

October 22, 2017

Although current trading activity represents a bearish price outlook, Dr. O.A. Cleveland still believes the 65 cent price support will hold. . .even though more experts are abandoning that position.

Market Analysis

Shurley: October Numbers Not As Expected, But Prices Hold

October 18, 2017

USDA’s October production and supply and demand estimates are like apples – pick and choose and you’ll find some numbers you like...and some you won’t.

Market Analysis

Trying to Read the Market: Bearish, Neutral or Bullish?

October 13, 2017

After finding USDA’s October WASDE report initially bearish and somewhat neutral, cotton prices went mildly bullish thinking about stronger demand and the real size of the U.S. and foreign crops.

Market Analysis

Examining Loan Program and Rate Changes for 2017

October 9, 2017

Dr. Don Shurley provides an analysis of what changes in the marketing assistance loan for 2017 could mean for cotton growers.

Around The Gin
Product News

Bayer Looking for FiberMax One Ton Club Growers for 2017

November 16, 2017

Cotton growers who produce an average of 2,000 lb/A on 20 or more acres planted to FiberMax varieties in 2017 are eligible to be part of the 13th annual FiberMax One Ton Club.

Product News

Monsanto Delays NemaStrike for Additional Review

November 2, 2017

After finding cases of skin irritation, Monsanto is pulling its nematode seed treatment NemaStrike for further product review.

Product News

Intrepid Trio: Naturally Balanced Nutrition in Every Granule

November 1, 2017

Intrepid Trio contains three essential nutrients for cotton plants.

Product News

Save Time, Increase Efficiencies with Mixmate

November 1, 2017

Mixmate from Praxidyn is a precision chemical mixing system for small farms to large enterprises.

Product News

Crumpler Ironworks & Fabrication

November 1, 2017

Crumpler Ironworks & Fabrication is committed to providing the highest level of service, honesty and integrity, regardless of project size.

Product News

Delivering Proven Performance Across the Cotton Belt

November 1, 2017

Seed varieties, traits and crop protection products from Bayer deliver proven performance to growers across the Cotton Belt.

Product News

Growers Continue to Count on Americot and NexGen

November 1, 2017

Americot is dedicated to working with cotton growers throughout the Cotton Belt to provide elite performing NexGen varieties within the marketplace.

Product News

Deere Adds New Narrow Track Versions to 9RX Tractor Lineup

November 1, 2017

John Deere has added three new 9RX Narrow Track Tractors, expanding its lineup of high-horsepower machines.

Latest News
Market Analysis

Shurley: Demand Is Key to Price Strength and Stability

November 21, 2017

Demand is the key to cotton's future. We still have a way to go, but the outlook has certainly improved.

Market Analysis

U.S. Sales Booming to Meet Bullish Demand

November 17, 2017

Cotton appears to be caught in a battle between supply and supply. And that keeps prices well positioned to stay where they are.

Market Analysis

Increased Cotton Demand Moving the Market

November 11, 2017

A bullish supply demand report for November proves that demand moves markets. And demand for cotton has resurfaced.

Market Analysis

Cleveland: Yields, Quality, Consumption Still Rising

November 4, 2017

Reports of high yields, premium quality and growing consumption are keeping prices at the higher end of the trading range.

Market Analysis

India and Frost Combine to Prop Up Market

October 27, 2017

India’s plan to keep more of its cotton for domestic use, plus a potential freeze in West Texas, propped up the market during the past week.

Market Analysis

Bears Growling on Harvest and Demand Challenges

October 22, 2017

Although current trading activity represents a bearish price outlook, Dr. O.A. Cleveland still believes the 65 cent price support will hold. . .even though more experts are abandoning that position.

Market Analysis

Shurley: October Numbers Not As Expected, But Prices Hold

October 18, 2017

USDA’s October production and supply and demand estimates are like apples – pick and choose and you’ll find some numbers you like...and some you won’t.

Market Analysis

Trying to Read the Market: Bearish, Neutral or Bullish?

October 13, 2017

After finding USDA’s October WASDE report initially bearish and somewhat neutral, cotton prices went mildly bullish thinking about stronger demand and the real size of the U.S. and foreign crops.

Market Analysis

Examining Loan Program and Rate Changes for 2017

October 9, 2017

Dr. Don Shurley provides an analysis of what changes in the marketing assistance loan for 2017 could mean for cotton growers.

Market Analysis

Prices Still Sideways as Bearish Moods Grow

October 6, 2017

The market is watching weather and waiting for USDA’s October report. But bearish signs are starting to surface in some segments.

Market Analysis

Cleveland: Market in Hang On and Wait Mode

October 1, 2017

Cotton prices are holding without clear direction right now, as the market continues to watch USDA projections and harvest conditions for answers.

Market Analysis

Lower Chinese Stocks, Higher Polyester Prices Offer Market Hope

September 22, 2017

The market is holding steady, thanks again to China. Their Reserve auction has reduced cotton stocks and bumped consumption. And now, polyester prices are rising as the Chinese trim production.

Market Analysis

USDA Spins Market with Record Supply-to-Use Ratio

September 15, 2017

Hurricanes were but a mere hiccup for the world and U.S. crops. Instead, USDA spun some record-setting numbers that left the market dizzy.

Market Analysis

Shurley: Cotton Makes a Hard Landing

September 15, 2017

Following USDA’s September numbers, December cotton seems to have landed back in the 69-cent, pre-Harvey area.

Market Analysis

Higher Prices Holding as Winds Keep Blowing

September 10, 2017

An ill wind is blowing amidst the chaotic cotton trading wrought by back to back hurricanes slamming into two of the country’s major cotton producing regions. But which way does the wind blow?