facebook_pixel

Report Softens Prices, Consumption Concerns Rise

USDA’s June supply demand report sent old crop and new crop prices lower at week’s end as the market absorbed thoughts larger crops on the horizon in importing countries as well as the Franc Zone.

World production was projected at 115 million bales, compared to the May estimate of 113 million (numbers are rounded to the nearest million). World consumption was elevated to 117 million, up 750,000 bales from the prior month. Thus, world trade in raw cotton is expected to decline an estimated 800,000 bales compared to the May report. World ending stocks were increased 600,000 bales and were estimated at 88 million as of July 31, 2018.

Granted, these are subjective estimates, but the USDA database is unquestionably very creditable. Thus, it is likely that the New York ICE contracts will remain under pressure until more is known about both the U.S. and other major crops.

December has been well supported at 70-72 cents week after week, and trading has been partial to 73 cents. The contract is showing signs of weakening down to 68-69.50, but it is too early in the growing season to see that just yet. However, a kind Mother Nature has the potential to drive December below 65 cents.

Given the expected increase in foreign production, USDA did drop its estimate of U.S. exports for the 2017-18 marketing year 500,000 bales, down to 13.5 million. Again, these estimates will remain very fluid as the Northern Hemisphere production season moves forward. No other changes were made with respect to the U.S. situation: production, 19.2 million bales; consumption, 3.4 million bales; and carryover, 5.5 million bales.

Sales from the China National Reserve are on target to reach 10 million bales, and sales could be closer to 11 million. The Chinese stocks are systematically being worked lower in a very orderly manner. Equally important, China has shown no penchant to increase its stocks level. And, it is also noteworthy that the government has stayed true to its goal of buying only a limited quantity of high quality stocks from the grower. Thus, Chinese carryover at the end of the 2017-18 marketing season will likely be down to 40 million bales – down from 2015-16 beginning stocks of 67-70 million bales.

The long discussed on-call dilemma of the market and textile mills is drawing to an end, as July’s first notice day is now less than two weeks away. Mills have been very active with fixations, and with July futures below 76 cents, all the pressure is now off the mills.

U.S. crop progress has remained remarkable despite an unusual spring. In most all instances, the crop is advanced compared to historical perspectives. Some dry areas do remain, and nighttime temperatures have been borderline low in other areas. The use of percentages can be very misleading, but I note that the year-ago level of crop rated good to excellent was 47%. It stood at 61% this week.

Across the world, cotton continues to lose favor in the battle for an improved share of the fiber market. We have enjoyed the ability to recently work with others in outlining cotton’s charge to once again find some way to compete at the consumer level. However, there has been great frustration within the working group in realizing that a cheap (as compared to inexpensive) acid-based petroleum fiber has all but slammed cotton to the back seat of fiber choice, and even cast cotton as an environmentally-damaging fiber product when intuition clearly points in the opposite direction.

The world cotton industry has watched an ever-ratcheting decline in its popularity almost without any success. The marketing arm of the world cotton industry has stood idle as never before. Hopefully some of the efforts of this international cotton group will soon begin to bear fruit.

Yet, the U. S cotton grower must begin to participate in these efforts, or, as one prominent U.S. marketing expert recently commented when speaking of the world fiber market, “Cotton is the new wool in world fiber demand.”

U.S. growers: Get on board with the National Cotton Council and Cotton Incorporated.

Give a gift of cotton today.

Topics: , ,

Leave a Reply

Market Analysis Stories
Market Analysis

Cotton Prices Settle, Poised to Climb Again

February 16, 2018

The market’s downside move appears to be over, ending a three-week downturn.

Market Analysis

Cotton Futures Nudge Higher, Despite Forecast for Rising U.S. Sowings

February 13, 2018

Cotton futures nudged higher, despite a much-watched survey on U.S. sowings showing a seven-year high, as the estimate came in

Market Analysis

Still Optimistic, but Fundamentals Do Rule the Market

February 3, 2018

Last week’s price correction was overdue, yet the market is still positive. But it’s best to remember that the simple fundamentals of supply and demand do rule the day.

Market Analysis

“Here We Go Again” as Market Preps Another Run

January 26, 2018

The price breakout above 80 cents continues to build its base in the very low 80s as it prepares for its next challenge to the 85 cent level.

OA Cleveland
Market Analysis

Could Quality Shortage Push Cotton to a Dollar?

January 19, 2018

Cotton’s roller coaster price trip is on, and it’s really just beginning. The steep incline is in front of us.

Market Analysis

Shurley: Things to Consider as Prices Climb

January 19, 2018

The reasons for better prices seem fairly obvious, but the strength of the current uptrend has been surprising. Looking ahead, growers need to keep certain factors in mind.

Market Analysis

Cleveland: The Bull Will Continue Charging

January 12, 2018

Multiple market factors are at work, with demand continuing to lead the way to higher prices. That means the bull market will keep charging ahead.

Around The Gin
Product News

Bayer Shares the Risk with Cotton Farmers

January 26, 2018

Bayer offers replant, crop loss and yield protection to growers who plant FiberMax and Stoneville cotton seed.

Product News

Americot Adds New Sales Support in GA, KS and TX

January 23, 2018

Americot has expanded its sales support team in Georgia, Kansas and the Rolling Plains of Texas.

Product News

Indigo Offers Premium for Indigo Cotton Production

January 9, 2018

Indigo Ag has announced a new program that offers significant price premiums for U.S. cotton growers who contract to grow Indigo Cotton.

Product News

New Bayer Varieties Focus on High Yield, Adaptability

January 5, 2018

Bayer releases five new FiberMax and Stoneville varieties for introduction in 2018.

Product News

New PhytoGen TRiO Guards Cottonseed Investment

January 3, 2018

New PhytoGen TRiO seed treatment helps provide early season protection for young cottonseed from diseases, insects and nematodes.

Product News

Americot Adds Seven to Sales, Research Teams

December 20, 2017

Americot has added seven new sales and research associates to the company’s staff across the Cotton Belt.

Product News

Seven New Varieties in Deltapine Class of 18

December 11, 2017

Seven new varieties – including five Bollgard 3 XtendFlex offerings – join the Deltapine product lineup as the Class of 18.

Product News

Special Roundup Ready PLUS Incentives for Arkansas

December 7, 2017

Monsanto is offering a special Roundup Ready PLUS Crop Management Solutions platform in Arkansas for 2018 for growers planting XtendFlex cotton and Roundup Ready 2 Xtend soybean varieties.

Latest News
Market Analysis

Cotton Prices Settle, Poised to Climb Again

February 16, 2018

The market’s downside move appears to be over, ending a three-week downturn.

Market Analysis

Cotton Futures Nudge Higher, Despite Forecast for Rising U.S. Sowings

February 13, 2018

Cotton futures nudged higher, despite a much-watched survey on U.S. sowings showing a seven-year high, as the estimate came in

Market Analysis

NCC: Multiple Factors Offer Mixed Signals for Cotton

February 11, 2018

According to NCC economists, a few key factors will shape the U.S. cotton industry’s 2018 economic outlook.

Market Analysis

Talking Curveballs, Credibility and Carryovers

February 9, 2018

The February WASDE report served up a curve ball that caught the industry off guard. For the sake of USDA’s reputation, I hope they are correct.

Market Analysis

Still Optimistic, but Fundamentals Do Rule the Market

February 3, 2018

Last week’s price correction was overdue, yet the market is still positive. But it’s best to remember that the simple fundamentals of supply and demand do rule the day.

Market Analysis

“Here We Go Again” as Market Preps Another Run

January 26, 2018

The price breakout above 80 cents continues to build its base in the very low 80s as it prepares for its next challenge to the 85 cent level.

Market Analysis

Could Quality Shortage Push Cotton to a Dollar?

January 19, 2018

Cotton’s roller coaster price trip is on, and it’s really just beginning. The steep incline is in front of us.

Market Analysis

Shurley: Things to Consider as Prices Climb

January 19, 2018

The reasons for better prices seem fairly obvious, but the strength of the current uptrend has been surprising. Looking ahead, growers need to keep certain factors in mind.

Market Analysis

Cleveland: The Bull Will Continue Charging

January 12, 2018

Multiple market factors are at work, with demand continuing to lead the way to higher prices. That means the bull market will keep charging ahead.

Market Analysis

Cleveland: Don’t Ignore the Gift Horse. Feed the Market!

January 7, 2018

Don’t get caught looking a gift horse in the mouth. Cotton prices are at a profitable level for growers, and the market is asking to be fed.

Market Analysis

Shurley: New Year Cotton Policy Update

January 5, 2018

Recent legislative action in Congress could potentially bring cotton back under Title I commodity protection. Dr. Don Shurley explains the details.

Market Analysis

Shurley: December Report Seals the Deal

December 19, 2017

Based on the December USDA Crop Production numbers, any notion of this 2017 crop getting below 21 million bales seems unlikely at this point.

Market Analysis

It’s a Wonderful Day in Cotton’s Neighborhood

December 15, 2017

With apologies to Mr. Rogers…it’s a wonderful day in the neighborhood, and the cotton market has been mine.

Market Analysis

With Prices Rallying, It’s Time for “Significant Action”

December 8, 2017

The long-awaited rally above 70 cents appeared to mature this week. For those not already priced at 75 cents, it could be time to take significant action.

Market Analysis

Prices Push Above 70 Cents as Demand Remains High

December 2, 2017

Driven by tightening world stocks and led by an ever-increasing world consumption, cotton prices continue to move higher.