facebook_pixel

Treats, Not Tricks, Appearing in Cotton Market

The nearby New York December appears headed for another 63 cent plus close void of any excitement, volatility or increased open interest.

Mills remain cash market buyers trading generally only hand-to-mouth and being fully satisfied with their needs. Chinese mills continue to appear to scramble to find high quality cotton and have all but depleted the non-Chinese supplies that were stored in country.

I will get to the price outlook, but for now allow me a small sliver of freedom. Where is Jerry Calvani when I need him? Getting fat on pecans out in Carlsbad I suppose, and not sharing any. Jerry was about the only one that could decipher through my writings when I was struggling with the market. I seem to be struggling now, and he is a no show.

Early last week, I was about to throw in the towel. Now I am a bit more excited about prices moving at least a nickel higher. No, I am not bullish. But I am a ton more bullish than bearish!

The bottom is in. The year-long 61-69 cent trading range remains very dominant and, given the status of demand, will remain strongly entrenched at least through March.

The Northern Hemisphere is not yet 50% harvested, but the crop is getting smaller around the globe, notably in India, China and the U.S. The second crop in Brazil, fast becoming the more important of the two – absence exceptional Divine intervention – will be smaller than expected, as will be the Australian crop.

Trick or Treat. It is November now, past the time for a new seasonal low. It is time to move higher but it will take several trips to the dental office and a few 20 Mule Teams to pull cotton prices back above 66 cents, let alone the 68-69 cent top of the trading range.

Demand finally appears to be showing up at the retail shelves. But mills should not be expected to find themselves more active in the market until March. It will take active mill buying at that time to force the trade toward long positions friendly enough to pump up the speculative fund long activity.

U.S. export commitments are some 39% behind the 2014-15 pace, while commitments to China are 42% behind the same time year ago pace. Obviously there is a correlation. However, export sales to Vietnam are near making up for the difference.

One is tempted to conclude that it is the decline in Chinese imports that is the burden on demand and, therefore, prices. However, yarn imports into China continue to increase and offset what initially appears to be a decline in cotton demand by all Chinese textile activity. It is the declining demand by spinning mills that is measured by these statistics, not the demand for cotton that requires further processing before hitting the retail shelf. That is, it is a mere measurement of the decline in Chinese spinning and is not representative of a decline in the demand for cotton by the Chinese textile industry.

World cotton demand is increasing, just not at the pace needed to pull prices higher during the glut of the harvest season. Additionally, one should not be overly worried by the slow pace of USDA exports compared to the prior year. World trade is simply less than it was a year ago.

The November world supply demand report remains over a week away, but USDA enumerators are walking the fields as this is being written, collecting data for the November U.S. crop estimates. My guess is that the U.S. cotton crop will come down another 300,000 bales, down to 13.0 million bales.

However, whether USDA buys into it or not in the November 10 report, the Indian crop has already been severely diminished. Look for that crop to be between 26.25 and 27.0 million bales, compared to the current USDA estimate of 29 million bales. Granted, India has not yet completed the first picking of their 2015 crop, and USDA historically is somewhat reluctant to make significant changes until the first pick is completed.

Yet, the season-long international story has been about the Indian drought, and USDA has been slow to make adjustments – sooner or later.

Likewise, the Chinese crop could easily be another 500,000 bales lower, but USDA did make major adjustments in that crop last month, and, to their credit, earlier than expected.

Quality will remain the key, and U.S. growers with high quality cotton will see a further boost in prices.

Jerry, the American cotton growers could use you. Where are you?

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.