facebook_pixel

Cleveland: Prices Holding in Face of Softening Exports

The July lost 46 points on the past week and had a gain of only 28 points on the month. The year-to-date gain of 749 points suggests the fireworks are over.

First notice day for the July contract is now eight weeks away. Yet, while the technical perspective remains undefined and fundamentals are mildly negative, the bulls continue to push for higher prices.  The softening of exports, as bullish as they have been, are laying the foundation for price slippage.

May did climb to 80 cents just prior to its first notice day and keeps the hope alive for July to climb to 81-82 cents, but I am a doubter. Fundamentals will not push prices higher, but on-call positioning could create a small rally. The bears are in no position to take charge, but the market will slowly drift lower over the next two months.

As has been discussed for six weeks, the market is picking its top. New crop prices will continue to find support at 72 cents, but the flirtation with 75 cents continues. However, there will have to be significant unexpected weather difficulties to allow for much upside.

December futures were up 53 points in April and 508 points on the year. Longer term, December is expected to trend lower, but the market is exhibiting strong demand for both the 2017 and 2018 crops. Thus, cotton’s long term prospective remains very positive.

Export sales, again reflecting the May contract run to 80 cents, were off 50% from the prior week and 60% from the monthly average, and totaled a net of only 115,500 RB of upland and 5,900 RB of Pima. Sales for the next marketing year were 65,300 RB of upland and 7,500 RB of Pima. Shipments continued their very strong trend, as 302,400 RB of upland were exported along with 15,500 RB of Pima.

The May surge to 80 cents, basis New York, implies a textile-delivered CFR price above 90 cents and basically denies mills of operating incentive. Prices are simply too high for mills. Thus, the export rationing process has begun. There is no spigot that says “off.” But with prices at this level, the market generates its own spigot. Granted, there is only a very limited availability of high quality U.S. crop remaining for export.

It is noted that weekly exports sales of upland were at the lowest level since mid-September 2016. Concerns regarding losing export share due to changes in NAFTA rules made the rounds this past week. U.S. cotton enjoys an important million bale export market with Mexico, but cotton is very unlikely to be involved in any serious NAFTA discussion, as the economics are not there.

NAFTA accounts for less than 6% of the U.S. apparel market, and the trend is lower. Granted, both cotton and corn are very important aspects of agricultural trade with Mexico. Too, any loss of apparel activity in Mexico would not be re-shored to the U.S., but rather replaced from Asia. The U.S. would be expected to strongly protect its agricultural industries, but not private and non-agricultural textile investments in Mexico.

The ratio of July on-call sales to on-call purchases fell to 10:1 on the week, but is still wide enough to keep bullish ideas in the marketplace. Yet, with two months remaining for mills to make their fixations, time remains for them to work out of their pricing predicament. Too, with CFR prices to mills at 90 cents, what mill business there is will tend to be fixed price rather than on-call. This makes it easier for mills to get out of their on-call sales predicament.

However, the market will continue to experience triple digit trading days, both up and down. Again, the market is believed to be only debating its topping action.

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.