facebook_pixel

India and Frost Combine to Prop Up Market

News of the Indian government’s plan to keep more of the country’s cotton in country for domestic use shot prices higher on Monday, and the market was able to hold about half of that 250-plus point leap all week.

The news sent Indian prices higher and positioned the U.S. as the most competitive crop available on the world market – both ideas that sent the cotton bulls to the Board on a buying spree. Open interest moved higher for the first time in several weeks, and talk of a test above 71 cents was revived.

Additionally, a potential freeze in West Texas hovered over the market most of the week. Initial ideas from cotton meteorologists called for only the very northern end of District 1N to be affected, but more recent data suggests the freeze may be both more severe and affect more acres than previously suggested. Nevertheless, the market appears to be waiting for more definitive activity before moving in any direction. Yet, the 65-70 trading range will continue to hold, with an upward bias.

Cotton’s potential for higher prices has been discounted on numerous occasions the past three months. Yet, big crops and even bigger crops have, to date, met the same fate – a firm line of price support. Prices simply have not demonstrated any desire to move below 65 cents, basis December.

World demand has eased higher for the past three years and has enjoyed a greater surge the past six months. As such, world carryover has fallen 20 million bales since the 2015-16 cotton marketing season. World consumption has increased 8 million bales over this period. It is this combination of declining carryover and stronger demand that will continue to offer long-term price support. In fact, cotton demand is expected to continue a strong growth pattern for the next several years.

It is likely that world carryover will fall below 89 million bales during the current 2017-18 marketing season. More importantly, the market is preparing for the 2019-20 marketing season when the domestic supply of Chinese cotton will have fallen to a level such that China will again become an aggressive importer on the world market.

USDA’s crop enumerators will be in the fields over the weekend and early in the week as they collect data for the November crop production estimate. The current season will continue to confound the estimates, as the crop has already faced three hurricanes and now is seeing an early freeze in the Southwest. Too, as was the case with much of the hurricane timing, the freeze is occurring during a survey period, delaying any reporting calculations until the following month.

The U.S. crop, currently estimated at 21.1 million bales, is fast on its way to falling to no more than 20.5 million. Too, export sales were revived this week as net upland sales jumped 289,100 RB (a marketing year high), and Pima sales were 16,200 RB. While sales are impressive, and even some 2.7 million bales ahead of last year’s pace, actual shipments are trailing the prior year’s pace by almost 300,000 bales. However, it is not unusual for first quarter shipments to lag.

Mills were very aggressive with fixations on the week, suggesting their nervousness about price activity. On-call sales did not advance on the week, but only because mill fixations were so large. Thus, on-call sales will continue to support prices.

Price bias is higher, but growers should not expect any rally beyond 300-400 points. The trading range will continue at 65-70 cents, with a shot at 71 cents.

Give a gift of cotton today.

Topics: , ,

Leave a Reply

Market Analysis Stories
Market Analysis

Shurley: Demand Is Key to Price Strength and Stability

November 21, 2017

Demand is the key to cotton's future. We still have a way to go, but the outlook has certainly improved.

Market Analysis

Cleveland: Yields, Quality, Consumption Still Rising

November 4, 2017

Reports of high yields, premium quality and growing consumption are keeping prices at the higher end of the trading range.

Market Analysis

India and Frost Combine to Prop Up Market

October 27, 2017

India’s plan to keep more of its cotton for domestic use, plus a potential freeze in West Texas, propped up the market during the past week.

Market Analysis

Bears Growling on Harvest and Demand Challenges

October 22, 2017

Although current trading activity represents a bearish price outlook, Dr. O.A. Cleveland still believes the 65 cent price support will hold. . .even though more experts are abandoning that position.

Market Analysis

Shurley: October Numbers Not As Expected, But Prices Hold

October 18, 2017

USDA’s October production and supply and demand estimates are like apples – pick and choose and you’ll find some numbers you like...and some you won’t.

Market Analysis

Trying to Read the Market: Bearish, Neutral or Bullish?

October 13, 2017

After finding USDA’s October WASDE report initially bearish and somewhat neutral, cotton prices went mildly bullish thinking about stronger demand and the real size of the U.S. and foreign crops.

Market Analysis

Examining Loan Program and Rate Changes for 2017

October 9, 2017

Dr. Don Shurley provides an analysis of what changes in the marketing assistance loan for 2017 could mean for cotton growers.

Around The Gin
Product News

Bayer Looking for FiberMax One Ton Club Growers for 2017

November 16, 2017

Cotton growers who produce an average of 2,000 lb/A on 20 or more acres planted to FiberMax varieties in 2017 are eligible to be part of the 13th annual FiberMax One Ton Club.

Product News

Monsanto Delays NemaStrike for Additional Review

November 2, 2017

After finding cases of skin irritation, Monsanto is pulling its nematode seed treatment NemaStrike for further product review.

Product News

Intrepid Trio: Naturally Balanced Nutrition in Every Granule

November 1, 2017

Intrepid Trio contains three essential nutrients for cotton plants.

Product News

Save Time, Increase Efficiencies with Mixmate

November 1, 2017

Mixmate from Praxidyn is a precision chemical mixing system for small farms to large enterprises.

Product News

Crumpler Ironworks & Fabrication

November 1, 2017

Crumpler Ironworks & Fabrication is committed to providing the highest level of service, honesty and integrity, regardless of project size.

Product News

Delivering Proven Performance Across the Cotton Belt

November 1, 2017

Seed varieties, traits and crop protection products from Bayer deliver proven performance to growers across the Cotton Belt.

Product News

Growers Continue to Count on Americot and NexGen

November 1, 2017

Americot is dedicated to working with cotton growers throughout the Cotton Belt to provide elite performing NexGen varieties within the marketplace.

Product News

Deere Adds New Narrow Track Versions to 9RX Tractor Lineup

November 1, 2017

John Deere has added three new 9RX Narrow Track Tractors, expanding its lineup of high-horsepower machines.

Latest News
Market Analysis

Shurley: Demand Is Key to Price Strength and Stability

November 21, 2017

Demand is the key to cotton's future. We still have a way to go, but the outlook has certainly improved.

Market Analysis

U.S. Sales Booming to Meet Bullish Demand

November 17, 2017

Cotton appears to be caught in a battle between supply and supply. And that keeps prices well positioned to stay where they are.

Market Analysis

Increased Cotton Demand Moving the Market

November 11, 2017

A bullish supply demand report for November proves that demand moves markets. And demand for cotton has resurfaced.

Market Analysis

Cleveland: Yields, Quality, Consumption Still Rising

November 4, 2017

Reports of high yields, premium quality and growing consumption are keeping prices at the higher end of the trading range.

Market Analysis

India and Frost Combine to Prop Up Market

October 27, 2017

India’s plan to keep more of its cotton for domestic use, plus a potential freeze in West Texas, propped up the market during the past week.

Market Analysis

Bears Growling on Harvest and Demand Challenges

October 22, 2017

Although current trading activity represents a bearish price outlook, Dr. O.A. Cleveland still believes the 65 cent price support will hold. . .even though more experts are abandoning that position.

Market Analysis

Shurley: October Numbers Not As Expected, But Prices Hold

October 18, 2017

USDA’s October production and supply and demand estimates are like apples – pick and choose and you’ll find some numbers you like...and some you won’t.

Market Analysis

Trying to Read the Market: Bearish, Neutral or Bullish?

October 13, 2017

After finding USDA’s October WASDE report initially bearish and somewhat neutral, cotton prices went mildly bullish thinking about stronger demand and the real size of the U.S. and foreign crops.

Market Analysis

Examining Loan Program and Rate Changes for 2017

October 9, 2017

Dr. Don Shurley provides an analysis of what changes in the marketing assistance loan for 2017 could mean for cotton growers.

Market Analysis

Prices Still Sideways as Bearish Moods Grow

October 6, 2017

The market is watching weather and waiting for USDA’s October report. But bearish signs are starting to surface in some segments.

Market Analysis

Cleveland: Market in Hang On and Wait Mode

October 1, 2017

Cotton prices are holding without clear direction right now, as the market continues to watch USDA projections and harvest conditions for answers.

Market Analysis

Lower Chinese Stocks, Higher Polyester Prices Offer Market Hope

September 22, 2017

The market is holding steady, thanks again to China. Their Reserve auction has reduced cotton stocks and bumped consumption. And now, polyester prices are rising as the Chinese trim production.

Market Analysis

USDA Spins Market with Record Supply-to-Use Ratio

September 15, 2017

Hurricanes were but a mere hiccup for the world and U.S. crops. Instead, USDA spun some record-setting numbers that left the market dizzy.

Market Analysis

Shurley: Cotton Makes a Hard Landing

September 15, 2017

Following USDA’s September numbers, December cotton seems to have landed back in the 69-cent, pre-Harvey area.

Market Analysis

Higher Prices Holding as Winds Keep Blowing

September 10, 2017

An ill wind is blowing amidst the chaotic cotton trading wrought by back to back hurricanes slamming into two of the country’s major cotton producing regions. But which way does the wind blow?