Market traders know to expect the unexpected. Following a healthy correction the prior week, cotton was expected to quietly trade sideways awaiting this weeks USDA’s Supply/Demand numbers. For the most part, it did until Thursday when the lid blew off and march futures traded nearly limit up dragging December with it.
February 4, 2021
The USDA weekly export report came out this morning. Net sales of 286,700 bales of 20/21 crop were down 11% from last week but up 5% from the 4 week average. Exports of 319,000 bales is up 16% from last week and 12% from the four week average. The market rose a bit over night and seems stable so far today with this expected continued good news in the export reports.
January 29, 2021
As odd as it sounds, the market has come to resemble a mountain climber. For months, it has slowly but steadily, climbed the face of a mountain searching for footholds of support along the way.
January 18, 2021
The market’s torrid pace cooled off a bit last week. Monday’s announcement of the discovery of a newer, more infectious strain of Covid caused all markets to collapse.
December 28, 2020
The market’s torrid pace cooled off a bit last week. Monday’s announcement of the discovery of a newer more infectious strain of Covid caused all markets to collapse. Close to home, March cotton futures fell 240 points on the day and spent the remainder of the short week trying to regain lost ground.
December 14, 2020
A wise man once said, “Good things come to those who wait.” No truer words have been spoken after seeing march futures settle Friday at 74.08, gaining almost two and half cents on the week.
Interesting news from the USDA Reports that came out today are making the market move. As of right now it is 74.05 for March up from 72 at close yesterday. The USDA Crop Production Report has reduced its forecast for bales down 7% to 15.9 million bales for all cotton, and 15.4 million for Upland cotton. From a market perspective this certainly helps move the stocks to use ratio in the right direction. This was a big surprise to me as the Top Third marketing call this week had not mentioned the expectation of such a drop. The FAS report show next sales for new crop was 403,000 bales which is up 45% from last week, 61% from the 4 week average, and up 30% from 277,100 bales a tear ago. Exports were 323,200 bales up 79% from the previous week and 38% from the prior 4 week average.
The WASDE report showed that a lot of the reduction in US production has come from Texas. With the decrease in production and increase in exports ending stocks are at 5.7 million bales or 33% of use. This ratio is the second highest since 2007/08. On a global look India and Pakistan both are showing 500,000 bales reductions and consumption is up 13% over 2019/20. This moves world ending stocks to a forecast of 97.5 million bales, 1.9 million lower than in 2019/20.
The USDA Cotton Ginnings report shows total Upland Cotton at 9,356,450 bales for this crop, which is the lowest by far for this point in the last four years. Georgia is at 1,008,750 bales compared to 1,758,300 bales at this point last year. Anecdotal information I have gathered from various vendors and contacts are other gins shows that the area south and west of us in Georgia have had significant yield loss in addition to a late start and even worse seed coat fragment issues than us. Some gins are already cutting out ginning days due to lack of cotton, while other gins are predicting up to a 1/3 reduction in total bales year over year. I have not heard of any yield issues from growers in our area, in fact most have said they expect good yields.
If you would like copies of the actual reports, you may go to https://www.usda.gov/media/agency-reports or let me know what you want and I will get it for you.
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December 4, 2020
As a writer, I firmly believe words are meaningful. Last week’s market review is testament to this. The mere mention of 80 cent cotton drew tremendous response from readers.
Given it was a holiday week with traders’ minds likely elsewhere, there was little in the way of market expectations. Surprisingly, however, significant price swings occurred each day with March posting a slight gain for the week closing at 73.36.
Last week’s market was dominated by the roll activity of merchants, funds, and specs. Indicative, Open Interest on the March futures contract surpassed December as daily trading volume reached record levels.
After the previous week’s significant selloff, we were hoping last week’s activity would confirm this was only a needed correction in an overbought market. Early on, this appeared to be the case as the market retraced nearly 50 percent of those losses.
The ghosts and goblins of Halloween came early last week. In just a week’s time we experienced a hard freeze in the Southwest, another hurricane in the Southeast, an uptick in Covid cases around the globe, and a stock market decline the likes of which….
October 16, 2020
Like a restless bull trying to find a hole in the fence, the cotton market repeatedly challenged 70 cents in every trading session last week. like a sturdy fence, each attempt was thwarted most likely by harvest selling.
Active trading last week led to a great deal of price volatility. After surpassing 66 cents early, it yielded to signs economic recovery may be progressing at a slower pace than hoped. nevertheless, trading in a wide range from 66.44 to 63.90, it valiantly fought back to settle Friday at 64.99, only nine points shy of where it started the week.
Weekly Market Report from Choice Cotton includes some interesting comments on markets in general and the dollars impact on trade. Also some upcoming reports to watch for.