Limit Up, Limit Down

Can I call you back? The market is limit up and things are crazy around here.”

I heard that from two different cotton merchants while making calls last month for Cotton Grower and sister publication Cotton International Magazine. To say the least, cotton futures have been on a wild ride – so wild in fact that it is risky trying to write about them in a column that comes out on a monthly schedule. In the market situation that we’ve been in recently, a significant change could have occurred by the time I finished writing this.
I receive a lot of market comments via emails and e-newsletters, and they reflect as much about the market’s mood as closing prices and open interest. Listed below are a few quotes that I have pulled from newsletters discussing NY Futures during the first week of March:

“I fear that the cotton market is broken …”

“The cynic in me wants to say, ‘I’ve fallen and can’t get up,’ in regard to the current cotton market.”

“The present cotton market doesn’t seem to be able to serve the role which it has dutifully performed for almost 140 years now. Price discovery isn’t supposed to be found off the screen and available only to those lucky enough to have secured a position in the option ring.”

“This was a day that the funds took some profits. Just take a look at the casualties … Perhaps cotton was punished the most severely. It didn’t take long for us to be limit down.”

“This is a combination of insanity and ignorance … But that doesn’t mean it will be fixed tomorrow.”

“The NY futures market, in no way, is trading near term the fundamentals of cotton, but rather perceptions of the future. For now, the market is considerably overbought, based on near term fundamentals.”

“The cotton market is not focused on cotton fundamentals, but rather the fundamentals associated with the grain contracts, relative to ethanol (energy) demand and the food crisis relative to vegetable oil consumption.”

According to people who buy or sell cotton – those who use the futures market as a hedge against price movements that affect their production and day-to-day business – the NY Futures market isn’t serving its original purpose. Instead, it is a virtual slot machine for one-armed bandit speculative funds whose endless supply of capital and absolutely no ownership of raw cotton create point moves that can’t be explained by any fundamentals.

By the time this month’s issue gets to your mailbox, it is anyone’s guess what the market will be doing. One thing is certain – you can count on change. But should the cotton industry be subject to wild, unreasonable market moves because spec fund managers are itching for a weekend at The Mirage? That’s not good for anybody, and the cotton industry needs to be extremely observant to how this develops in coming months. With a solid cooperative effort, the cotton industry can preserve the function of the NY Futures and give producers and merchants the hedge they need for the businesses.

Editor’s

Leave a Reply

Planting Stories
Planting

Managing Cotton after Uneven Emergence

June 13, 2016

Mississippi State University specialists offer guidelines for managing cotton fields with uneven plant maturity.

Planting

USDA Projects 9.56 Million Cotton Acres in 2016

March 31, 2016

USDA’s March 31 Prospective Plantings report projects that U.S. cotton growers will plant 9.56 million acres in 2016 – an 11% increase over last year.

Planting

March Rainfall Could Mean More Cotton Acreage

March 29, 2016

More acres may be shifting back to cotton in 2016. For producers who may be planting cotton for the first time in several years, variety selection can be a formidable challenge.

Planting

Preplant Burndown Time in NC

March 8, 2016

Mid-March through early April is the ideal time for preplant burndown applications in North Carolina cotton fields.

Planting

Reference Guides Online for Proper Variety Placement

March 2, 2016

Charts to help provide guidance to growers on properly placing and managing cotton varieties are now available online from Mississippi State University.

Planting

Clemson: Focus on Insect Management, Proper Variety Selection

February 4, 2016

Clemson Extension specialists point to insect management and proper variety selection as keys to help SC cotton producers grow more profitable crops in 2016.

Planting

SC Cotton Growers Look to Rebound from 2015 Flood

January 28, 2016

After South Carolina’s cotton crop was essentially flooded out in 2015, what’s in store for the state’s growers this year?

Around The Gin
Product News

ChemChina/Syngenta Deal Gets U.S. Foreign Investment Approval

August 22, 2016

ChemChina and Syngenta have received a key clearance for the proposed consolidation of the companies.

Product News

Enlist Cotton Trait Earns Full Export Approval

August 10, 2016

Cotton varieties containing Dow AgroSciences’ Enlist trait now have full export approval in key countries.

Product News

Spray Equipment Offer Helps Maximize On-Target Applications

August 3, 2016

A new spray technology equipment offer can help growers participating in Roundup Ready PLUS Crop Management Solutions upgrade their sprayers to maximize on-target applications.

Product News

EPA Allows Sale and Use of Existing Belt Inventory

August 2, 2016

The U.S. EPA’s Environmental Appeals Board has upheld an earlier decision to cancel registration for Bayer's insecticide Belt, but is allowing sales of existing stocks to growers for use.

Product News

Indigo Launches Water Efficiency Product for Cotton

July 26, 2016

Boston-based research firm Indigo has launched its first commercial product – Indigo Cotton – which helps improve the cotton plant’s water use efficiency.

Product News

Enlist Technology Provides Tolerance to Three Key Herbicides

July 13, 2016

The Enlist weed control system will give growers the ability to use three modes of action postemergence in both cotton and soybeans.

Product News

Providing Upland Varieties with Acala-like Quality

July 13, 2016

PhytoGen offers growers several upland cotton varieties with Acala-like fiber quality for added premiums and higher profitability.

Product News

PhytoGen Names Winners in Best Yielder Club Sweepstakes

June 29, 2016

A North Carolina cotton grower was named grand prize winner in the 2016 PhytoGen Best Yielder Club sweepstakes.

Latest News
Planting

Managing Cotton after Uneven Emergence

June 13, 2016

Mississippi State University specialists offer guidelines for managing cotton fields with uneven plant maturity.

Planting

Guidelines for Replanting Decisions

May 24, 2016

There are no definitive guidelines for making replant decisions. But a list of factors to consider may help make those decisions a bit easier.

Planting

Improved Soil Moisture for Most Texas Cotton Fields

May 4, 2016

Improved soil moisture in most cotton fields in Texas are pushing growth and maturity in early-planted acres and are setting up the state’s northern acres for good planting conditions.

Planting

USDA Projects 9.56 Million Cotton Acres in 2016

March 31, 2016

USDA’s March 31 Prospective Plantings report projects that U.S. cotton growers will plant 9.56 million acres in 2016 – an 11% increase over last year.

Planting

March Rainfall Could Mean More Cotton Acreage

March 29, 2016

More acres may be shifting back to cotton in 2016. For producers who may be planting cotton for the first time in several years, variety selection can be a formidable challenge.

Planting

Preplant Burndown Time in NC

March 8, 2016

Mid-March through early April is the ideal time for preplant burndown applications in North Carolina cotton fields.

Planting

Reference Guides Online for Proper Variety Placement

March 2, 2016

Charts to help provide guidance to growers on properly placing and managing cotton varieties are now available online from Mississippi State University.

Planting

Clemson: Focus on Insect Management, Proper Variety Selection

February 4, 2016

Clemson Extension specialists point to insect management and proper variety selection as keys to help SC cotton producers grow more profitable crops in 2016.

Planting

SC Cotton Growers Look to Rebound from 2015 Flood

January 28, 2016

After South Carolina’s cotton crop was essentially flooded out in 2015, what’s in store for the state’s growers this year?

Planting

Market Prices Impacting Early 2016 Crop Decisions

January 19, 2016

As farmers in the Rio Grande Valley try to finalize cropping decisions before planting begins in the coming weeks, many are still struggling with what to plant. For some, that will likely be cotton.

Planting

Mississippi Variety Trial Data and Planning Budgets Now Available

December 4, 2015

Mississippi State University Extension’s 2015 On-Farm Cotton Variety Trials publication and Cotton 2016 Planning Budgets guide are both now available online.

Planting

NC State: PGR Management Considerations

June 17, 2015

Side-dressing could help spur vigorous cotton growth, especially with timely rain. According to the NC State Extension cotton team, it’s time to start PGR management plans.

Planting

El Nino Weather Good for High Plains Cotton

May 12, 2015

The Texas High Plains are benefitting from the current El Nino weather pattern. And that’s good news for this year’s cotton crop.

Disease Control / Nematodes

New Cotton Webcasts Focus on Seedling Diseases and Soil Fertility

April 29, 2015

Two new webcasts focusing on seedling diseases and soil fertility have been added to the Focus on Cotton online webcast resource.

Planting

Don’t Let Early Season Thrips and Weed Management Impact Seedling Vigor

April 17, 2015

Increased challenges in early season thrips and weed management can potentially impact the value of vigorous cotton seedling growth.