Shurley On Cotton: Markets Finds New Upward Resistance Point, New Bottom
June 12, 2020
By Don Shurley, Cotton Economist-Retired, Professor Emeritus, University of Georgia
The remaining outlook for old crop and near-term outlook for new crop grew dimmer this week with release yesterday of USDA’s supply/demand numbers/projections.
We’ve still got a long way to go with new-crop, but yesterday’s numbers raise some caution flags.
We’re coming off a tough 2019 crop year. To come out better in 2020, we’ll clearly face challenges. Yesterday’s report, at least in my mind, seemed to reinforce that and solidify the direction for prices and the hurdles we face toward a healthier cotton outlook for the 2020 crop year and beyond.
New crop Dec futures, after flirting with 61 cents, have since fallen back to the 59 to 60 cents area. There is clearly “resistance” now at 61 cents and “support” at 55 to 56. Price direction will hinge on demand and exports and U.S. crop size and condition.
USDA first estimate of actual acres planted will be released on June 30.
The main highlights and takeaways from yesterday’s report are:
Yesterday’s report suggests that rebound in demand/Use from the coronavirus pandemic may be slower than earlier projected. I also wonder what can be done to invigorate the U.S. textile mill industry so we are not as dependent on exports.
Large stocks in China used to be the problem. Stocks in the rest of the world are now the problem.