facebook_pixel

Market Lows Remain Higher, Even With Recent Price Dip

Cotton futures, basis the ICE contracts, gave up all of the prior three weeks gains this past week as the market lost some 200 points. Prices moved from the prior week’s 65.50 cents to some 63.50 cents this week, as most of the tumble came during Thursday and Friday trading.

The market had shown limited weakness since the release of the USDA’s April supply demand report. Recall that USDA failed to increase exports of U.S. cotton by 200,000 bales (or more) as the market had expected. Granted, it was only 200,000 bales out of a total world trade of about 30 million bales. But the perception of a tightness in premium stocks seemed to evaporate from the speculative community’s vigorous support of the market.

On the heels of profit taking by the longs, the USDA weekly export report noted negative sales of Upland cotton, as export cancellations of prior sales overwhelmed new sales. This brought out the bears to feed, and, in two days, they took some 200 points out of the market.

There should be no panic by the bulls as the attempt at higher prices did see plenty of light above the previous trading range high. Actually, the market moved above the 200-day moving average, representing a move higher than most had not expected during the move. Thus, the failure of holding the 65.50 to 66.00 cent mark should not be viewed as a setback for those calling for a return to the 70 area in both and new crop prices.

The tightness does exist, and mills continue to buy hand to mouth. Thus, the market’s move to 66 cents and above saw mills cut off all buying.

While that paints a potential bearish picture, recall it was just a month ago the buying was cut off at 63 cents, and three months ago, buying slowed as the market “climbed” to 59 to 60 cents. Thus, we see that the market continues to see higher and higher lows, generally viewed as the definition of an uptrend.

Too, while the weekly net sales of U.S. cotton were negative, export shipments totaled 216,900 bales. While this was only about half of the yearly high of over 400,000 bales shipped last week, total cotton export commitments now stand at 101 percent of the five year average – and there are 19 more “export weeks” remaining in the 2014-15 marketing year.

We should be careful not to think that the only way for the market to move is down. As discussed, mills withdrew from the market at 65 cents on this move, and subsequent action supported their action. Yet again, they were withdrawing at 59 cents and then at 63 cents. Therefore, while the trading range remains in force, it has stretched its arms to the topside. The 61 cent support still holds. Price action will work the 150 to 250 point range on either side of 63.50 cents.

It is now on the late side of April, and much of the Mid-South region of the U.S. remains waterlogged.  Mother Nature’s actions are fast becoming a major fundamental in the market, although there is still time to dry out and allow field work. Too, with acres shrinking in this region, growers will not be stressed for equipment and can get the crop in at a rapid pace. However, widespread areas remain too wet for now. Yet, somehow the crop always gets planted.

Yes, Mother Nature usually kills the crop a time or two before we even see a very good stand of plants. Yet, given the shortage of high quality in both the U.S. and around the globe, the reduction in planted acreage in the Mid-South region potentially opens the door for a stronger than typical seasonal price rally associated with delayed plantings. Additionally, if planting delays occur, it will become the weather that follows that will become critical.

 

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?