“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 on Cotton: Prices Steady, But Tempting Downside Support

May 27, 2015

Amid the volatility and unknowns of the cotton market, this much we know – cotton production in 2015 will require patience, a clear understanding of the risks and careful evaluation of marketing tools and choices.

Market Analysis

Weather Worries Put Cotton Market on the Defensive

May 26, 2015

The cotton market found itself on the defensive this past week, as weather issues in all cotton-producing countries helped drive the dollar higher and prices lower.

World Cotton Use
Market Analysis

Shurley on Cotton: No Surprises in May USDA Numbers, Sideways Market Continues

May 13, 2015

USDA’s May WASDE report contains the first U.S. and World estimates for the 2015 crop year, and the numbers are about as expected – some better than expected.

Market Analysis

Market Up and Down, But Not Down and Out

May 11, 2015

With some exceptions, cotton prices spent time backing and filling the entire week. Yet the market is still attempting to flex its arms and muscles a bit to the top side.

OA Cleveland
Market Analysis

Is the Cotton Market Showing Longer Legs?

May 1, 2015

The stars seemed to align for the cotton market this past week, as prices moved to highs not seen in almost nine months.

Market Analysis

Shurley on Cotton: So Far, Prices Fail To Advance

April 28, 2015

To date, there has been little, if any, incentive for producers to do much with regard to pricing this year’s crop.

Market Analysis

Cotton Inc. Resets Risk Management Seminar in Maricopa for May 19

April 28, 2015

May 19 is the new date for Cotton Incorporated’s Cotton Price Risk Management Seminar in Maricopa, AZ.

Around The Gin
Product News

EPA Approves New Premix for 2016 for Cotton, Soybean Weed Control

May 29, 2015

Cotton and soybean growers will have a new weed control option in 2016 with Warrant Ultra Herbicide, a premix of acetochlor and fomesafen.

Product News

Deltapine NPE Program Begins Eighth Year of On-Farm Variety Evaluation

April 28, 2015

Nearly 200 farmers will be part of the Deltapine New Product Evaluator program this year to help evaluate cotton variety candidates for the Deltapine Class of 16.

Product News

EPA Approves Enlist Duo Herbicide for Use in Additional States

April 2, 2015

The EPA has approved Enlist Duo herbicide for use in nine additional states, including four in the Cotton Belt.

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.

Latest News
Market Analysis

Shurley on Cotton: Prices Steady, But Tempting Downside Support

May 27, 2015

Amid the volatility and unknowns of the cotton market, this much we know – cotton production in 2015 will require patience, a clear understanding of the risks and careful evaluation of marketing tools and choices.

Market Analysis

Weather Worries Put Cotton Market on the Defensive

May 26, 2015

The cotton market found itself on the defensive this past week, as weather issues in all cotton-producing countries helped drive the dollar higher and prices lower.

Market Analysis

Plexus: Look for Tight, Long-Term Trading Range

May 22, 2015

The market has encountered both strong support and resistance to keep prices confined to narrow trading ranges for both July and December cotton.

Market Analysis

Despite Bearish Reports, Cotton Continues to Hold the Higher Ground

May 16, 2015

The cotton market continues to defy the onslaught of bearish shots across its bow.

Market Analysis

Shurley on Cotton: No Surprises in May USDA Numbers, Sideways Market Continues

May 13, 2015

USDA’s May WASDE report contains the first U.S. and World estimates for the 2015 crop year, and the numbers are about as expected – some better than expected.

Market Analysis

Market Up and Down, But Not Down and Out

May 11, 2015

With some exceptions, cotton prices spent time backing and filling the entire week. Yet the market is still attempting to flex its arms and muscles a bit to the top side.

Market Analysis

Is the Cotton Market Showing Longer Legs?

May 1, 2015

The stars seemed to align for the cotton market this past week, as prices moved to highs not seen in almost nine months.

Market Analysis

Shurley on Cotton: So Far, Prices Fail To Advance

April 28, 2015

To date, there has been little, if any, incentive for producers to do much with regard to pricing this year’s crop.

Market Analysis

Cotton Inc. Resets Risk Management Seminar in Maricopa for May 19

April 28, 2015

May 19 is the new date for Cotton Incorporated’s Cotton Price Risk Management Seminar in Maricopa, AZ.

Market Analysis

Market Bumps Upward as the Weather Watch Begins

April 27, 2015

The cotton market jumped higher this week, finding price support from the litany of pre-plant weather problems around the globe.

Market Analysis

Market Lows Remain Higher, Even With Recent Price Dip

April 20, 2015

Cotton futures gave up three weeks of gains last week as the market lost some 200 points. Yet the market continues to see higher and higher lows, which generally points to an uptrend.

Market Analysis

Shurley on Cotton: Prices Heading Toward “Testing Ground”

April 10, 2015

Now that old crop has clearly broken through 65 cent ceiling, there is belief that prices will continue to trek higher toward a new “testing ground.”

Market Analysis

Tight Supplies of Quality Cotton Poised to Drive Market Higher

April 5, 2015

A very tight quality shortage that only gets tighter will drive cotton prices higher. This market has 70 cents, basis December, written all over it.

Market Analysis

Plexus: Factors Lining Up for Price Growth

April 3, 2015

Reduced global acreage, increased mill demand and low inventories of quality cotton could help push prices into the high 60s or even low 70s over the next few months.

Market Analysis

Shurley on Cotton: USDA Planting Intentions In; Time for Market to Focus on Other Realities

March 31, 2015

The March 31 USDA Prospective Plantings report of 9.55 million cotton acres is slightly higher than most other pre-report expectations. Now, it’s time for the market to focus on other matters.