facebook_pixel

Cleveland: Strong Exports Driving World Stocks Lower

With apologies to Willie Nelson and Don Meredith, “Turn out the lights.” But then, the party is not over just yet.

The old crop bull has run his course, and new crop plantings will make it difficult for December futures to recapture its once 75-76 cent luster. However, strong export sales and brisk shipments of U.S. cotton should continue for at least two more months, if not the nearly four months remaining in the 2016-17 marketing season. The old crop July should continue to hold the 72 cent level or better, and this will maintain price support under the December contract into mid-May.

In its upcoming world supply demand report on April 11, look for USDA to increase its estimate of U.S. exports another 500,000 bales – just like last month – and adjust its forecast for the year upward to 13.7 million bales. The result would lower U.S. carryover to 4.0 million bales. Before the end of the marketing year, it may well be that U.S. exports climb to 14 million bales, taking U.S. carryover down to 3.7 million bales.

Additionally, with continued good sales out of the Chinese reserve, world carryover stocks will likely be down another 6.0 million bales on the year. Indian consumption could be somewhat lower, but only marginally.

Export sales for the week ending March 30 were a net of 270,000 RB of upland and 14,600 RB of Pima for the current season. Sales of 129,800 RB were reported for 2017-18. Thus, total sales were 416,400 RB. If the current pace continues for the remainder of the season, 2016-17 export sales would essentially total 16 million bales. Even if sales drop to only 150,000 bales a week, total sales would still climb above 15.5 million.

Shipments continue very brisk as well. Weekly shipments totaled 447,300 RB of upland and 16,100 RB of Pima – thus, the suggestion that this season’s export deliveries will climb to near 14 million bales. Therefore, some 2.0 million bales will likely be carried over for delivery in the 2017-18 marketing year.  Regardless, export sales will continue to be one of the fundamental factors supporting prices.

Too, with declining world stocks, the market will continue to find support for new crop, but with some slippage. However, given a good growing season, do not discount the possibility of December futures falling to the mid 60’s as it awaits the harvest season.

Speculative and limited fund money continued to leave the cotton market during the week. Mills were taking advantage of this trading and beginning to aggressively make fixations on their on-call sales contracts. The ratio of on-call sales to on-call purchases dropped to 10:1 this past week – still slightly bullish, but now only in a supporting role as opposed to being a leading price indicator. Mills will continue to take advantage of this, but a 10:1 ratio will likely help keep the July contract in the 72-75 cent range.

Mother Nature has provided an abundance of moisture the past 10 days to much of the cotton belt. However, some important areas remain deficient with respect to planting needs. Yet, as stated last week, this is the season for spring rains.

Keep the lights on, but the party is over.

Give a gift of cotton today.

Topics: , ,

Leave a Reply

Market Analysis Stories
Market Analysis

Shurley on Cotton: More Tariff Talk

April 9, 2018

The jury is still out on whether or not the “verbal war” between the U.S. and China will actually result in tariffs, and what the impact on cotton will be.

Market Analysis

Strong Demand, Drought Concerns Pushing Prices

April 14, 2018

Thanks to mill demand, shrinking quality stocks and increased drought concerns in the Southwest, cotton continues to post gains in spite of the selling pressure created by rolling positions to the July contract.

don shurley
Market Analysis

Shurley: This is Now USDA’s Number for Cotton

April 1, 2018

In my opinion, USDA’s March 30 Prospective Plantings report gets us much closer to what will eventually be the acres planted number.

Young Cotton Plant
Market Analysis

Cleveland: Start Pricing This Year’s Crop

March 24, 2018

Plant, plant, plant continues to be the motto. But it’s also time to add price, price, price to the discussion.

Market Analysis

Demand, Weather Concerns Driving Strong Trade

March 16, 2018

The market seldom sees a three-year price stream so favorable.

Market Analysis

Shurley: Pulling the Trigger on the 2018 Crop

March 16, 2018

Producing a cotton crop ultimately commits you to also sell the crop. But at what point do you say the price is “good enough?”

Market Analysis

Multiple Factors Driving Cotton’s Price Growth

March 9, 2018

The fundamentals of supply and demand – among other factors – continue to drive cotton prices toward the high 80s.

Around The Gin
Product News

FiberMax Honors One Ton Club Growers for 2017

April 17, 2018

The FiberMax One Ton Club recently honored 188 cotton growers who qualified for the club with their 2017 harvest results.

Product News

BASF Adds Engenia Spray Tool to Aid Applications

April 16, 2018

A new easy-to-use resource puts critical weather requirements for applying Engenia herbicide in one convenient location.

Product News

Reduce Timing Guesswork for Cotton Planting

April 16, 2018

Bayer’s online Cotton Planting Forecasting tool can help growers determine the optimal planting window to improve their chances at securing a strong stand.

Product News

Deltapine NPE Program Begins Class of 19 Evaluations

April 9, 2018

Nine Class of 19 variety candidates will be in growers’ fields this year as the Deltapine New Product Evaluator (NPE) Program kicks off its eleventh season.

Product News

Americot Expands Research and Sales Teams

April 5, 2018

Americot has added six new team members to the company’s research and sales staffs.

Product News

Greenleaf Introduces TipGuard Nozzle System

April 5, 2018

Greenleaf Technologies has introduced its new TipGuard System to protect spray tips from contact damage.

Product News

New BASF Reward Program for AR Growers Facing Dicamba Ban

March 27, 2018

BASF has revised its Grow Smart Rewards program to provide Arkansas growers alternative weed control solutions during the dicamba application ban from April 16 through October 31.

Product News

DuPont Vydate Products Fully Available for 2018

March 15, 2018

DuPont Vydate brand insecticide/nematicide products – including Vydate C-LV for cotton – will be fully available for sale and use during the 2018 growing season.

Latest News
Market Analysis

Strong Demand, Drought Concerns Pushing Prices

April 14, 2018

Thanks to mill demand, shrinking quality stocks and increased drought concerns in the Southwest, cotton continues to post gains in spite of the selling pressure created by rolling positions to the July contract.

Market Analysis

Shurley on Cotton: More Tariff Talk

April 9, 2018

The jury is still out on whether or not the “verbal war” between the U.S. and China will actually result in tariffs, and what the impact on cotton will be.

Market Analysis

Market Holds in Face of Tariff Rumblings

April 8, 2018

World consumption continues to support prices, but the mere suggestion of tariffs makes speculative fund managers nervous and increases market volatility.

Market Analysis

Cleveland: Prices Rally on USDA Acreage Report

April 1, 2018

USDA’s annual Prospective Plantings report pleasantly surprised the market, as seen by the price rally for cotton following the report’s release.

Market Analysis

Shurley: This is Now USDA’s Number for Cotton

April 1, 2018

In my opinion, USDA’s March 30 Prospective Plantings report gets us much closer to what will eventually be the acres planted number.

Market Analysis

Cleveland: Start Pricing This Year’s Crop

March 24, 2018

Plant, plant, plant continues to be the motto. But it’s also time to add price, price, price to the discussion.

Market Analysis

Demand, Weather Concerns Driving Strong Trade

March 16, 2018

The market seldom sees a three-year price stream so favorable.

Market Analysis

Shurley: Pulling the Trigger on the 2018 Crop

March 16, 2018

Producing a cotton crop ultimately commits you to also sell the crop. But at what point do you say the price is “good enough?”

Market Analysis

Multiple Factors Driving Cotton’s Price Growth

March 9, 2018

The fundamentals of supply and demand – among other factors – continue to drive cotton prices toward the high 80s.

Market Analysis

The Market’s Advice: Plant, Plant, Plant!

March 4, 2018

As world and U.S. ending stocks continue to shrink, growers have an opportunity to price the 2018 crop in the low 80s.

Market Analysis

Trucking Issues Limiting Timely Cotton Movement

February 24, 2018

Demand continues to exceed expectations. But new trucking regulations are putting a damper on timely movement of cotton and other ag products.

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.