Shurley on Cotton: Prices Attempt to Stabilize, But Still Show Weakness

By Dr. Don Shurley

 

Over the past two weeks, prices for Dec14 futures have continued to slide, but tried to stabilize in a tight band of mostly 67 to 68.5 cents. Typically when you see an extended narrow trading range like this, it indicates that there is not much pressure/interest to push prices either direction on current news. Until July 24, it seems.

On July 24, prices suddenly broke down 203 points to close at just over 66 cents. This may signal yet another round of weakness in prices.

This week’s export report showed a second consecutive week of strong 2014/15 sales. Unfortunately, it wasn’t enough to prevent the 200 point decline in Dec14 prices. It has been expected that good export sales at these now lower prices would be the medicine to what ails this market, or at least slow the bleeding. This recent decline tells us that other factors/concerns are obviously also at play.

Reports seem to suggest that the decline was due to forecasts for slower than expected global economic growth and forecast for higher than expected acreage and production of cotton in India.

Crop conditions have declined slightly for three consecutive weeks (as of July 20). In reality, the condition of the crop has changed little the entire season, hovering around 3.5 (mostly fair to good). Present crop condition, on average, is running ahead of last year. While crop condition has been relatively unchanged, Dec14 prices have declined 10 cents, suggesting other significant factors are at play.

Crop condition on August 1 is not always a reliable predictor of yield. A crop condition of 3.5 could suggest a yield of 820 to 830 lbs per acre. But some years have been “outliers,” and have been much better or worse than this. The current USDA estimate is 16.5 million bales at 816 lbs/acre. The August estimate will be the first of the season based on actual producer survey and conditions. An August estimate that would push the crop higher will likely continue to add downward pressure on prices. Future price direction will depend on any supply shocks globally and demand news.

Shurley is Professor Emeritus of Cotton Economics, Department of Agricultural and Applied Economics, University of Georgia

Topics: ,

Leave a Reply

Market Analysis Stories
Market Analysis

Cleveland: Cotton Now in Clint Eastwood Mode

February 12, 2016

Right out of Clint Eastwood movies, the cotton market is following the script just as written last month...as well as his spaghetti westerns.

Market Analysis

Shurley on Cotton: Prices Still Low, but Find Stability

January 25, 2016

After recently threatening the 60-61 cent range, prices now seem to have found a little support and – dare we say – upward momentum.

OA Cleveland
Market Analysis

Cleveland: “Stuck in the Mud” Market Remains Tiresome

January 22, 2016

This market is stuck in the mud – looking more like just holding a bottom rather than turning around.

Market Analysis

Cleveland: Market Yawns as It Closely Watches China

January 18, 2016

Despite a 2.0 million bale reduction in world production and consumption, the market yawned and moved lower, all while watching for signs of a potential dump of low grade stocks by China.

Market Analysis

Shurley on Cotton: Looking Back at 2015 and Ahead to 2016

January 13, 2016

The New Year has not started off well for cotton. It is concerning, but this recent decline is likely short-term.

OA Cleveland
Market Analysis

Cleveland: Stagnant Prices and Demand Are Frustrating

January 8, 2016

The cotton market continues to take it on the chin, as prices go nowhere and demand for cotton remains low.

don shurley
Market Analysis

Shurley on Cotton: Ending the Year with a Positive Outlook

December 22, 2015

In spite of the challenges in 2015, it’s good to remember that the marketing year is less than half over. There may yet be better opportunities down the road.

Around The Gin
Product News

Brake Herbicide Receives EPA Registration for Cotton

February 12, 2016

The EPA has registered Brake herbicide for pre-emergence use in cotton.

Product News

New FieldView Drive Provides Real Time Field Data Transfer

January 26, 2016

The Climate Corporation is launching FieldView Drive, a device that provides seamless transfer of real time field data and mapping from planting or harvesting equipment to a mobile device.

Product News

PhytoGen Releasing First Enlist Cotton Variety for 2016

January 13, 2016

PhytoGen is releasing PHY 490 W3FE, the first cottonseed variety with the Enlist cotton trait, for the 2016 growing season.

Product News

Enlist Cotton Ready to Launch for 2016

January 6, 2016

Dow AgroSciences announced that cotton growers will have access to the Enlist cotton technology in 2016.

Product News

Bayer Announces New 2016 FiberMax and Stoneville Cotton Varieties

January 5, 2016

Bayer has announced the release of three new FiberMax and Stoneville varieties for 2016, all featuring the company’s GlyTol, LibertyLink and TwinLink technologies.

Product News

Deltapine Announces Class of 16 Varieties

December 14, 2015

Four new Bollgard II XtendFlex cotton varieties make up the recently announced Deltapine Class of 16.

Product News

PhytoGen Varieties Raise Standards for Yield and Quality

November 30, 2015

Growers propelled two PhytoGen brand varieties toward the top of the 2015 USDA Cotton Varieties Planted report.

Product News

2016 Seed Showcase – All-Tex and Dyna-Gro

November 16, 2015

Sister cottonseed companies are working to extend their footprint in 2016.

Latest News
Market Analysis

Cleveland: Cotton Now in Clint Eastwood Mode

February 12, 2016

Right out of Clint Eastwood movies, the cotton market is following the script just as written last month...as well as his spaghetti westerns.

Market Analysis

Cleveland: Bullish Reports, Bearish Responses

February 7, 2016

Absence of demand for cotton, among other factors, is sending mixed signals to the market.

Market Analysis

Cleveland: Feeling Bearish and Blue

February 1, 2016

Loss of cotton demand and a looming move of Chinese stocks has even O.A. Cleveland saying, “This hurts.”

Market Analysis

Shurley on Cotton: Prices Still Low, but Find Stability

January 25, 2016

After recently threatening the 60-61 cent range, prices now seem to have found a little support and – dare we say – upward momentum.

Market Analysis

Cleveland: “Stuck in the Mud” Market Remains Tiresome

January 22, 2016

This market is stuck in the mud – looking more like just holding a bottom rather than turning around.

Market Analysis

Cleveland: Market Yawns as It Closely Watches China

January 18, 2016

Despite a 2.0 million bale reduction in world production and consumption, the market yawned and moved lower, all while watching for signs of a potential dump of low grade stocks by China.

Market Analysis

Shurley on Cotton: Looking Back at 2015 and Ahead to 2016

January 13, 2016

The New Year has not started off well for cotton. It is concerning, but this recent decline is likely short-term.

Market Analysis

Cleveland: Stagnant Prices and Demand Are Frustrating

January 8, 2016

The cotton market continues to take it on the chin, as prices go nowhere and demand for cotton remains low.

Market Analysis

Shurley on Cotton: Ending the Year with a Positive Outlook

December 22, 2015

In spite of the challenges in 2015, it’s good to remember that the marketing year is less than half over. There may yet be better opportunities down the road.

Market Analysis

Cleveland: Low Demand Maintains Status Quo

December 21, 2015

Despite what should be positive indicators for cotton, the lingering loss of market share has simply stripped demand from the market for now.

Market Analysis

Shurley on Cotton: Hitting a Wall at 65 Cents

December 14, 2015

The disappointing decline is likely due to some of the bullish energy running out after the nice uptick we’ve experienced recently, plus a not so encouraging export report and the December USDA production and supply/demand numbers.

Market Analysis

Cleveland: Market Rises, Then Slips, Following USDA Report

December 14, 2015

The market slipped a bit last week. But it’s set to crawl higher – backing and filling along the way, but with a positive upward bias.

Market Analysis

Market Showing Bullish Indicators

December 4, 2015

The cotton market is demonstrating signs of life again. The U.S crop will be lower, and improved U.S. exports will hone sharp points on the old bull’s horns.

Market Analysis

Shurley on Cotton: Prices Finding More Support and Momentum

November 30, 2015

Prices are finding increasing support around the 62-cent level. That may not be exciting, but firming up the floor in a very volatile and uncertain market is a good thing.

Market Analysis

Shurley on Cotton: Prices Need Something to Grab Hold Of

November 16, 2015

Cotton prices desperately need something to grab hold of to help build momentum.