facebook_pixel

Of Demand, Adidas and Planting Intentions

It was an interesting week in the neighborhood.

What was thought to be a mildly bearish planting intentions report was rewarded triple-digit gains over the course of two trading sessions. That followed an all-time record high open interest posting in the Chinese ZCE market. Too, the New York Cotton Exchange (ICE) tallied its highest open interest since 2011. That was also the third highest since the record 302,683 in 2008.

Thus, the market is screaming its intentions of a major move. Yet, with all this activity, the old crop contracts are all below 58.50 cents, and the new crop December contract sits a point below 57.75.

Sideways trading can relieve the market of this very large open interest of course, or the market can break higher or lower for relief. Thus, for all the meaning we want to make of this, the market is keeping its cards close to its chest. The larger technical picture still points to the downside, although the bulls had a good week.

Last weekend’s announcement by the Chinese of the volume, origin of growth, grade and year of growth was informative, but did not rule out export offers. Nevertheless, the announcement seemed to imply that export offerings were not under consideration. Certainly, the market traded through the week feeling that exports were off the table. Thus, the market should continue to find its long-term support at 54 cents to its liking.

Yet, with both world and U.S. production prospects for the 2016-17 marketing year on the upswing, the 60 cents price resistance level will likely continue to offer too much resistance for trading above the 61 cent level. However, the planting season door is now open, and Mother Nature will distribute her April showers either in buckets, sheets or not at all. She does not seem to just let it simply float down anymore.

It is noted that world consumption is not expected to increase appreciably. But any increase associated with a draw down in Chinese stocks via an increase in Chinese domestic consumption will be a long-awaited step in the direction of disappearing the near 60-million bale Chinese carryover.

Nevertheless, the cotton industry continues to lose sight of the magnitude of its market share loss to chemical fibers. In this day and age of magic and sometimes meaningless catch worlds like sustainability, the chemical industry continues its dominance in convincing consumers that chemical fibers are healthier and more environmentally friendly than natural cotton fiber (the point being that U.S. cotton has a long track record of the proven efficient use of natural resources, whether compared to non-U.S. cotton or other U. S.-based agricultural production).

Unless, and until, cotton is able to regain some of the fiber market share, the demand for cotton will continue to shrink. It is all about demand, nothing else. Sugar coat the discussion, and tilt it anyway one may wish. Demand is the only game in town – everything else is window dressing.

A “for example” is the sports apparel company Adidas. The world’s second largest producer of sports apparel, the company not only advertises that it does not want to use United States-produced cotton, but it actually brags about being a better corporate citizen by not using U.S. cotton – all the time selling to the U.S. customer. Adidas actually claims that U.S. producers do not protect the environment, and that the company is committed to insure that none of the products are made from U.S. cotton. They prefer cotton from China, Pakistan, Turkey and Africa among others, because those growers are more conscious of the environment, so Adidas carries on.

I have to wonder how Mid-South growers feel about their environmental stewardship responsibilities after reviewing Adidas material. In the meantime, cotton loses market share.

Nike is the only international sports apparel company that uses more cotton than Adidas. Nike, of course does not blacklist U.S. cotton. Another company that supports the use of U.S. cotton is Under Armour. In fact, that company sponsors major events that specifically support the use of cotton and U.S. cotton in sports apparel.

Enough of promoting cotton versus chemical fibers.

The USDA March planting intentions report indicated that U.S. growers would plant 9.6 million acres in 2016, compared to a pre-report expectation of 9.4 million acres. This represents a million acre increase over 2015 plantings of 8.6 million. Actually, 9.6 million acres was the very upper end of the expectation range.

Most of the increase is expected to come from the Southwest and Mid-South. The West will be little changed from 2015, while the Southeast – driven by decreased plantings in North Carolina and South Carolina – will reduce acreage. Texas plantings are expected to be up 500,000 acres, with Mississippi up 130,000 and an increase in Arkansas of 120,000 acres.

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?