facebook_pixel

It Bears Repeating – Price New Crop Now!

If you like the price enough to plant it, then like the price enough to sell some of it. If you like the price enough to plant it, then like the price enough to sell some of it.

December futures are expected to move 10-15 cents lower. December futures are expected to move 10-15 cents lower.

Yes, that was duplicated. Most likely, I will even repeat it several more times. Yet, new crop prices are in the upper one third of the historical price range, and 2017 plantings are just about to take every seed the seed companies have.

Growers should be 60% priced on new crop. If you do not want to fix the price outright in either futures or with your mill/merchant/coop/agent, then buy puts as close to at-the-money as you can stand. In fact, my advice is to buy puts to cover 100% of your expected crop. However, you are still advised to fix price 60% of your expected production

Old crop prices defended the 78 cent futures level all week in anticipation of the release of the March USDA supply demand report. The report was generally as expected and drew little market attention, despite some major adjustments. Thus, the market is now set to stage its defense of 78 cents and attempt to push toward 80 cents and higher, basis the May contract.

Fundamentals may not seem to merit a push to 80 cents and above in old crop contract months. Yet, as I have stated before, the market is trading the imbalance in on-call sales versus on-call purchases. This imbalance continues to grow and is only adding fuel to the fire. The most recent report seemed to cool the market, but my suspicion is that it threw gasoline on the fire.

Total old crop on-call sales declined only 324 contracts and are now 80,094. This means that the price of some 8.1 million bales must be fixed on the May or July futures contract between now and mid-June. Too, the ratio of sales to purchases has now risen above 15 to 1 – i.e., the idea of gasoline added to the fire.

It is tempting to say the market is not even trading cotton, rather just the imbalance in call sales versus call purchases. However, the weekly export sales report was the big news this week, not the aforementioned March supply demand report. Some 22 countries – an unusually large number – were in the market for U.S. cotton this week.

Export sales, over 500,000 bales in each of the prior two weeks, came in for the third week at half a million bales. How can that be, one might ask?  Net upland sales totaled 248,900 RB. Pima sales were 14,100 RB. Therefore, current marketing year sales were 263,000 RB. However, combined upland and Pima sales for the 2017-18 marketing year were 218,100 RB, making total sales for the week 481,100 RB (nearly half a million).

In actual numbers, more than 1.5 million bales of U.S. cotton have been sold in the past three weeks, and at the very highest price levels of the year. Too, the demand is evident. Weekly export shipments jumped above 500,000 bales as well. Upland shipments were a yearly high of 529,000 RB, with Pima shipments adding another 15,100 RB. Thus, the demand for the high quality 2016 U.S. crop remains strong, and the international price for this high quality crop is still a bargain for world mills.

USDA increased its estimate of the 2016 U.S. crop to 17.2 million, up 300,000 bales. They did get serious about exports, increasing its estimate 500,000 bales up to 13.2 million bales and lowering carryover 300,000 bales to 4.5 million. Look for exports to eventually climb to 13.7 million and U.S. ending stocks to drop to 3.8-4.0 million bales. The Chinese market, still claimed by many to slow its purchases of U.S. cotton, will likely find it necessary to purchase high quality U.S. upland cotton to mix with the lower quality National Reserve stocks now being offered in order to achieve the necessary yarn quality required by weavers.

USDA increased its estimate of world carryover from 89.9 to 90.5 million bales, up 600,000 bales. World production was raised some 300,000 bales – all essentially in the U.S. – and consumption was lowered 100,000 bales. Essentially, there were not any production or consumption changes across the major cotton economies.

The cotton bull is striding to climb the worry wall. There is very limited speculative profit taking at this point. Price activity will continue to ride an upside bias.

Give a gift of cotton today.

Topics: , ,

Leave a Reply

Market Analysis Stories
Market Analysis

With Market Oversold, Is Bullish Return Near?

July 14, 2017

The cotton invert continues, as both the U.S. and Australian crops are oversold.

Market Analysis

Rain in India, U.S. Keeps Pressure on Prices

July 7, 2017

Beneficial rains in the U.S. and India kept pressure on cotton prices, as the December futures contract settled the past week unchanged.

Market Analysis

Bulls Push Market on Heels of USDA Planting Report

July 5, 2017

Smaller than expected U.S. cotton plantings – and the potential smaller crop – caught the bulls’ attention in the market.

Market Analysis

Market Catching Its Breath After 10-Day Slide

June 23, 2017

After an unprecedented 10-day drop in prices, the market is trying to catch its breath.

Market Analysis

Mother Nature, Not Bulls, Managing the Market

June 16, 2017

Cotton prices took a big hit, and bullish signals are hard to find. Mother Nature is now in charge.

Market Analysis

Shurley: June Report Sends Mixed Signals

June 15, 2017

USDA’s June WASDE report contained some good news and some bad news. Overall, Dr. Don Shurley considers the report somewhat bearish.

Market Analysis

Report Softens Prices, Consumption Concerns Rise

June 9, 2017

USDA’s June WASDE report sent old crop and new crop prices lower at week’s end, as manmade fibers take aim at cotton.

Around The Gin
Product News

Protect Cotton Potential from Weeds, Worms and Diseases

July 12, 2017

Southeast cotton producers say latest technologies from PhytoGen help protect yield and quality.

Product News

Monsanto “Troubled” by Arkansas Dicamba Decision

June 26, 2017

Monsanto has weighed in on the Arkansas Plant Board’s proposed ban of dicamba use in the state.

Product News

Drexel Adds Two Regional Sales Reps

June 16, 2017

Kyle Herring and David Davis have joined Drexel Chemical Company as regional sales representatives.

Product News

Dow AgroSciences Launching Enlist Corn in 2018

June 16, 2017

Following the launch of Enlist cotton, Dow AgroSciences will make Enlist corn commercially available for 2018 after receiving Chinese import approvals.

Product News

Transform Earns Section 18 Exemptions for Cotton, Sorghum

May 4, 2017

Transform WG insecticide has received Section 18 emergency use exemptions for use in cotton and sorghum in select states for the 2017 production season.

Product News

EPA Approves Monsanto’s NemaStrike Technology

May 2, 2017

The EPA has issued registration for tioxazafen, a new nematicide from Monsanto that will be branded as NemaStrike Technology for nematode control and yield protection in cotton, corn and soybeans.

Product News

Indigo Partners Launched for In-Field Technology Testing

April 25, 2017

Indigo is launching Indigo Partners, a collaboration of 25 U.S. growers and agronomic experts to test agricultural technologies – including Indigo’s microbial seed treatments – during 2017.

Product News

UPI Adds New Herbicide Products

April 14, 2017

UPI has added two new herbicides to its portfolio of high quality crop protection products for the U.S.

Latest News
Market Analysis

With Market Oversold, Is Bullish Return Near?

July 14, 2017

The cotton invert continues, as both the U.S. and Australian crops are oversold.

Market Analysis

Shurley: Prices Continue to Flounder in Lower Range

July 14, 2017

The July USDA crop production and supply and demand estimates report was not bad, but prices continue to show no improvement.

Market Analysis

Rain in India, U.S. Keeps Pressure on Prices

July 7, 2017

Beneficial rains in the U.S. and India kept pressure on cotton prices, as the December futures contract settled the past week unchanged.

Market Analysis

Shurley on Cotton: Where Did the Acres Go?

July 6, 2017

Dr. Don Shurley says the recent USDA Planted Acreage report did not deliver as expected, making times a bit confusing for producers looking to manage risk.

Market Analysis

Bulls Push Market on Heels of USDA Planting Report

July 5, 2017

Smaller than expected U.S. cotton plantings – and the potential smaller crop – caught the bulls’ attention in the market.

Market Analysis

Market Catching Its Breath After 10-Day Slide

June 23, 2017

After an unprecedented 10-day drop in prices, the market is trying to catch its breath.

Market Analysis

Mother Nature, Not Bulls, Managing the Market

June 16, 2017

Cotton prices took a big hit, and bullish signals are hard to find. Mother Nature is now in charge.

Market Analysis

Shurley: June Report Sends Mixed Signals

June 15, 2017

USDA’s June WASDE report contained some good news and some bad news. Overall, Dr. Don Shurley considers the report somewhat bearish.

Market Analysis

Report Softens Prices, Consumption Concerns Rise

June 9, 2017

USDA’s June WASDE report sent old crop and new crop prices lower at week’s end, as manmade fibers take aim at cotton.

Market Analysis

Sleepy Market Watching U.S. Crop Progress

June 3, 2017

The cotton market snoozed all week, watching crop development and holding solid at 72-73 cents for new crop December.

Market Analysis

Shurley: Prices Weaker but Remain Above Support

May 31, 2017

As growers complete planting and move fully into the growing season, evaluating the outlook and making price risk management decisions will be crucial.

Market Analysis

Market Settling In as Old Crop Settles Out

May 31, 2017

On-call sales versus purchases are coming in line. Old crop July is done, and the open interest contract leader is now December.

Market Analysis

Fluctuations and Cancellations Create Interesting Week

May 22, 2017

Despite price fluctuations and export sales cancellations over the past week, the cotton market hangs tough as U.S. planting continues.

Market Analysis

Shurley: Is This the Wake-Up Call We’ve Been Expecting?

May 15, 2017

Market movement in the past few weeks may be the wake-up call the industry has been expecting.

Market Analysis

Market Holding, but Lock in Prices Now

May 15, 2017

Cotton’s recent price surge is likely not done yet. But, growers who have not priced their 2017 crop should do so soon before the market softens.