Cotton Futures Ease Lower Following Texas Rains
May 21, 2012 Cotton futures eased lower in a very dull week as U.S. crop prospects received a boost with the first measurable moisture on much of the High Plains for the first time this season. While much of the moisture came in the form of hail the ten day forecast appears to hold more water for the area.
Actually, the market was a bit lazy during the week and prices slipped to near the very bottom of the late winter-early spring trading range. With the new crop December hovering just above 86 cents, the major support at 85 cents should hold, but will likely have a bloody fight on its hand if, in fact, West Texas does receive more moisture. For some time I have all but promised December would hold the 85 cent level, but it is obvious that mark is in danger of falling. The next solid support level comes in at the 80 cent mark. Yet, the 85 cent support mark should not be brushed aside.
Nevertheless, in the absence of new fundamental information that support level should hold. As if on key, the coming week will have a bundle of potential new information. The May supply demand report will be released on May 10 at 7:30 AM central time and can be accessed here. The report will include USDA’s first estimates of the 2012-13 world supply and demand forecast as well as any adjustments to 2009, 2010 and 2011 estimates. It does hold promise of impacting price activity at the Ney York ICE market.
U.S., Australian, Brazilian and Indian exports could all be changed. Too, consumption in India and China could be revised as well as in other countries, but to a lesser degree. The estimates of the Australian crop will likely be increased while the Chinese and Indian crops are expected to be lowered. World production is expected to be slightly lower while world consumption is expected to be larger than in the April estimate.
The AgMarket Network analysts will discuss the report and its ramifications the following morning, May 11, at 7:30 AM central. The listening options are as follows: Live over radio station KFLP 900 AM Floydada Texas and KZIP 1310 AM Amarillo Texas; Live over the internet at www.AgMarketNetwork.com; Listen to a recording around noon at www.AgMarketNetwork.com; or a podcast here.
U.S. export shipments remain robust and on pace to match or better USDA’s 11.5 million bales export estimate for 2011-12. Export sales, after an exceptionally strong prior week, were down remarkably this week. The current week sales data (last week’s actual trading) were tied to higher prices and were expected to be weak. Likewise, it is expected that next week’s report will show strong sales. Sales to China are set to further increase as it is expected that the government will extend more import quotas to mills, especially the private mills located in areas will excellent port access.
The market remains locked in its five month trading range and will like hold within the range throughout May. Actual planted acreage continues to look to be between 12.8 and 12.9 million acres.
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