facebook_pixel

Cleveland: Market Weakens as Prices Begin to Slide

After many weeks of building a base above 65 cents, and even seeing a trade back to 70 cents this past week, the market is showing signs of vulnerability.

This past week’s opportunity to fix prices at 70 cents may have been the final one until at least the spring. Cotton appears headed back to 65 cents, basis December, as the Northern Hemisphere harvest moves into full swing and mills will have wide access to 2016 crop cotton come November.

The availability of high quality cotton will continue to be key. But excellent weather conditions have allowed for full development of the top crop, and open harvest conditions from Georgia back west throughout the Mid-South will add to both the quantity and quality of the U.S. crop. This, in turn, will add weight on top of the 65 cent support level currently propping up the market.

Coupled with the weaker than expected U.S. economy, this has convinced a number of fund long money managers to not only take money out of the cotton market, but the other agricultural markets as well. It is the long speculative trader that must be again attracted to the cotton ring if the December contract is to hold the 65 cent level.

The market found excellent support from the Chinese National Reserve sale. But with that on hold until probably March, the market has lost the support of those relatively higher-than-world-market-price sales, and will likely find a tendency to drift lower into the next round of scheduled sales. Nevertheless, current crop Chinese cotton will not enter the world market, as the government will hold all of it for local usage. It is also expected that the speculative money that has been flowing to the Chinese cotton market will now show considerable shrinkage.

The supply side of the price equation will be the dominant market force through December. Thus, with the world crop projected to be slightly larger than forecast last month, the market will be set to drift lower into December.

While cotton consumption in China has increased, the easily available and very cheap (47-48 cents) acid-based polyester exported by China to the world textile industry has driven cotton consumption to its lowest per capita level in history. Too, cotton share of the textile spinning system now is at its lowest level in textile spinning history. The acid-based polyester industry, simply stated, has far exceeded cotton’s ability and willingness to attract consumers. This demand issue will not go away until the cotton industry admits it is simply being out-gunned for the attention of the world’s fiber consumer and begins to refocus on that same consumer.

Look for export sales to be slightly weak, as the Chinese industrial sector was on holiday all last week. However, the most current weekly export report showed total upland sales at a net 158,900 RB and Pima at 23,600 RB. The primary buyers were Vietnam, South Korea and China. Shipments surged ahead, with 212,500 RB of upland and 7,100 RB of Pima. Shipments now stand 600,000 bales ahead of the prior year pace, and sales are nearly 1.3 million bales ahead of the prior year pace.

The big U.S. crop (and getting bigger) is on track to sell 14 million bales in the export market. However, the spinning system simply has too much fiber competition for U.S. cotton exports to enjoy a 14+ million bale export market if the nearby contract moves higher than the 68 cent level.

Give a gift of cotton today.

Topics: , ,

Leave a Reply

Market Analysis Stories
Market Analysis

Cotton Prices Settle, Poised to Climb Again

February 16, 2018

The market’s downside move appears to be over, ending a three-week downturn.

Market Analysis

Cotton Futures Nudge Higher, Despite Forecast for Rising U.S. Sowings

February 13, 2018

Cotton futures nudged higher, despite a much-watched survey on U.S. sowings showing a seven-year high, as the estimate came in

Market Analysis

Still Optimistic, but Fundamentals Do Rule the Market

February 3, 2018

Last week’s price correction was overdue, yet the market is still positive. But it’s best to remember that the simple fundamentals of supply and demand do rule the day.

Market Analysis

“Here We Go Again” as Market Preps Another Run

January 26, 2018

The price breakout above 80 cents continues to build its base in the very low 80s as it prepares for its next challenge to the 85 cent level.

OA Cleveland
Market Analysis

Could Quality Shortage Push Cotton to a Dollar?

January 19, 2018

Cotton’s roller coaster price trip is on, and it’s really just beginning. The steep incline is in front of us.

Market Analysis

Shurley: Things to Consider as Prices Climb

January 19, 2018

The reasons for better prices seem fairly obvious, but the strength of the current uptrend has been surprising. Looking ahead, growers need to keep certain factors in mind.

Market Analysis

Cleveland: The Bull Will Continue Charging

January 12, 2018

Multiple market factors are at work, with demand continuing to lead the way to higher prices. That means the bull market will keep charging ahead.

Around The Gin
Product News

Bayer Shares the Risk with Cotton Farmers

January 26, 2018

Bayer offers replant, crop loss and yield protection to growers who plant FiberMax and Stoneville cotton seed.

Product News

Americot Adds New Sales Support in GA, KS and TX

January 23, 2018

Americot has expanded its sales support team in Georgia, Kansas and the Rolling Plains of Texas.

Product News

Indigo Offers Premium for Indigo Cotton Production

January 9, 2018

Indigo Ag has announced a new program that offers significant price premiums for U.S. cotton growers who contract to grow Indigo Cotton.

Product News

New Bayer Varieties Focus on High Yield, Adaptability

January 5, 2018

Bayer releases five new FiberMax and Stoneville varieties for introduction in 2018.

Product News

New PhytoGen TRiO Guards Cottonseed Investment

January 3, 2018

New PhytoGen TRiO seed treatment helps provide early season protection for young cottonseed from diseases, insects and nematodes.

Product News

Americot Adds Seven to Sales, Research Teams

December 20, 2017

Americot has added seven new sales and research associates to the company’s staff across the Cotton Belt.

Product News

Seven New Varieties in Deltapine Class of 18

December 11, 2017

Seven new varieties – including five Bollgard 3 XtendFlex offerings – join the Deltapine product lineup as the Class of 18.

Product News

Special Roundup Ready PLUS Incentives for Arkansas

December 7, 2017

Monsanto is offering a special Roundup Ready PLUS Crop Management Solutions platform in Arkansas for 2018 for growers planting XtendFlex cotton and Roundup Ready 2 Xtend soybean varieties.

Latest News
Market Analysis

Cotton Prices Settle, Poised to Climb Again

February 16, 2018

The market’s downside move appears to be over, ending a three-week downturn.

Market Analysis

Cotton Futures Nudge Higher, Despite Forecast for Rising U.S. Sowings

February 13, 2018

Cotton futures nudged higher, despite a much-watched survey on U.S. sowings showing a seven-year high, as the estimate came in

Market Analysis

NCC: Multiple Factors Offer Mixed Signals for Cotton

February 11, 2018

According to NCC economists, a few key factors will shape the U.S. cotton industry’s 2018 economic outlook.

Market Analysis

Talking Curveballs, Credibility and Carryovers

February 9, 2018

The February WASDE report served up a curve ball that caught the industry off guard. For the sake of USDA’s reputation, I hope they are correct.

Market Analysis

Still Optimistic, but Fundamentals Do Rule the Market

February 3, 2018

Last week’s price correction was overdue, yet the market is still positive. But it’s best to remember that the simple fundamentals of supply and demand do rule the day.

Market Analysis

“Here We Go Again” as Market Preps Another Run

January 26, 2018

The price breakout above 80 cents continues to build its base in the very low 80s as it prepares for its next challenge to the 85 cent level.

Market Analysis

Could Quality Shortage Push Cotton to a Dollar?

January 19, 2018

Cotton’s roller coaster price trip is on, and it’s really just beginning. The steep incline is in front of us.

Market Analysis

Shurley: Things to Consider as Prices Climb

January 19, 2018

The reasons for better prices seem fairly obvious, but the strength of the current uptrend has been surprising. Looking ahead, growers need to keep certain factors in mind.

Market Analysis

Cleveland: The Bull Will Continue Charging

January 12, 2018

Multiple market factors are at work, with demand continuing to lead the way to higher prices. That means the bull market will keep charging ahead.

Market Analysis

Cleveland: Don’t Ignore the Gift Horse. Feed the Market!

January 7, 2018

Don’t get caught looking a gift horse in the mouth. Cotton prices are at a profitable level for growers, and the market is asking to be fed.

Market Analysis

Shurley: New Year Cotton Policy Update

January 5, 2018

Recent legislative action in Congress could potentially bring cotton back under Title I commodity protection. Dr. Don Shurley explains the details.

Market Analysis

Shurley: December Report Seals the Deal

December 19, 2017

Based on the December USDA Crop Production numbers, any notion of this 2017 crop getting below 21 million bales seems unlikely at this point.

Market Analysis

It’s a Wonderful Day in Cotton’s Neighborhood

December 15, 2017

With apologies to Mr. Rogers…it’s a wonderful day in the neighborhood, and the cotton market has been mine.

Market Analysis

With Prices Rallying, It’s Time for “Significant Action”

December 8, 2017

The long-awaited rally above 70 cents appeared to mature this week. For those not already priced at 75 cents, it could be time to take significant action.

Market Analysis

Prices Push Above 70 Cents as Demand Remains High

December 2, 2017

Driven by tightening world stocks and led by an ever-increasing world consumption, cotton prices continue to move higher.