What are Today’s Market Fundamentals?

by Henry Gantz
Senior Editor, Cotton Grower Magazine
hgantz@meistermedia.com

Dr. O. A. Cleveland made a statement last week essentially saying that every day in the cotton trade is a new day with a different set of fundamentals. Ain’t that the truth.

The December contract flirted with 83 cents again last week but dropped to as low as 77.50 this morning. This coming on the heels of a USDA report yesterday showing that cotton acreage has dropped to 9.25 million acres – down 15% from last year and the lowest since 1983. Did the trade think there would be even fewer cotton acres? That may have been yesterday’s major fundamental news, but is it today’s? It’s not a rhetorical question. I’d really like to know.

Meanwhile, Rabobank last week released some positive long-term news for the cotton industry. Rabobank believes that acreage in India and China will be diverted to production of food crops. (India has already announced plans to end cotton exports this year simply to meet domestic demand.)

In the report below, Rabobank says that the United States is in a strong position to maintain a viable cotton-growing segment. Developing countries are likely to lose acreage to expanding food crops and urbanization. The way I see it, every acre diverted to food crops in any cotton-producing country is an opportunity for American cotton. But that’s a fundamental for another day, huh?