India – All India daily cotton arrivals are reported to be about 75’000 bales. Active import business continued for West African & US origins. The Indian Meteorological Department (IMD), in its first long-range forecast for the south-west monsoon, predicted that the monsoons will be near-normal for the current year.
Cotton prices continue locked in their technical channel with new crop fighting to climb above 78 cents while the old crop July struggles to breech the 80 cent mark. July’s objective is the 82.50-85.00 cent range, but December will continue to face a near impossible barrier just below 80 cents.
A VOLATILE WEEK FOR COTTON FUTURES, BUT SOME POSITIVE NEWS NOTED
• West Texas and Oklahoma Receive Rain, More in the Forecast • Positive Economic News for U.S. and China • A Strong Export Sales Report • Both Sides Signal Progress in Trade Talks • Crop Prospects Taking Center Stage
Cotton was lower Thursday as the highly anticipated weekly sales and exports report was less than friendly. As the old saying goes “Anticipation is always greater than Realization”. Thus, the basic ingredient missing in Thursday’s data was China.
ICE Cotton Extends Weekly Winning Streak 5 As China Issues Additional Import Quota
ICE cotton extended its winning streak to five in a row for the week ending April 12, with the July contract gaining 27 points (491 over the last five weeks) to finish at settling 78.86. The Dec contract gained 30, settling at 77.19. The July – Dec inversion was off slightly at 167 but will likely continue to prompt merchants to offshore old crop stocks.
Market Movement from 08th Apr 2019 to 13th Apr 2019
• Except Friday, this week was bear week. Bearish WASDE on Tuesday broke upward momentum of the cotton market. Over bought situation on NY and roll over to next future put pressure on NY till Friday. Even excellent US export sales report failed to change the down trend in cotton market. News of China releasing new 8 lakh tones of sliding scale quota on Friday put some life into the market. NY May ended w/w with some minor loss while NY July ended week with small w/w gain.
Cotton prices continue to ride the export wave as U.S. export sales exploded with more than 500,000 bales booked during the prior week. USDA did release its April world supply demand report which was seemingly bearish, but was totally faded by the market.
For several weeks the action has been dictated by spec buying into trade selling. With the bullish momentum fading, specs will probably take a breather, which would allow the market to ease off some more. However, we don’t see the trade chasing the market too far down with their hedge selling.
India – The Cotton Association of India (CAI) has released its latest S&D figures for the 2018/19 (October‐September period) season whereby the cotton crop estimate was reduced to 32.1 million bales, down 800’000 bales from the last estimates. The declines are mainly attributed to key growing states Telangana, Karnataka, Gujarat and Maharashtra. The balance sheet projects total cotton supply of 37.60 million bales, a domestic consumption of 31.60 million bales, exports of 4.70 million bales and a carry‐over stock of 1.3 million bales.
Market Improves, Future Unknown as Planting Approaches
In my previous comments to you, the title was “Cotton Continues to Need Clarity”. I’m not sure much has changed in that regard. The market has certainly made nice improvement, however, and we can be thankful for that.
There is still no word or advance in trade talks and the March 30th Prospective Plantings report, in my opinion, threw more uncertainty on the market.
Benchmark prices either increased or were stable over the past month.
Prices for the May NY futures contract increased, climbing from levels near 75 cents/lb in mid-March to those near 79 cents/lb recently. The July contract, which now represents more open interest, also rose and has maintained values slightly higher than those for the May contract.
Market Movement from 01st Apr 2019 to 06th Apr 2019
• This week was also dominated by bulls. There was consecutive fourth week gain in NY Futures. Last week USDA reduced US planting intention and Friday covered up with huge gain. US Export sales were excellent for current and for next season also. Fresh Chinese buying of US cotton were taken as a positive sign by market. Shipment also retained on the track to meet USDA target of 15 M bales. Specs reduced their short and short covering resulted in firmness on future markets.
ICE COTTON FUTURES POISED FOR A MOVE TO THE UPSIDE?
ICE cotton posted gains for the week ending April 5 – making it four in a row - with the Mar contract gaining 64 points (476 over the last four weeks) to finish at 78.25, above long-term downtrend resistance. The Dec contract gained 145, settling at 76.89. The July – Dec inversion weakened to 170 but will likely continue to prompt merchants to offshore old crop stocks.
Ever since last Friday’s USDA’s indication that cotton plantings would likely be some 500,000-700,000 acres less than market expectations, cotton prices have moved higher and higher. The momentum is still in the market.
The smaller than expected U.S. plantings brought out Chinese government buyers and they were looking for U.S. styles.
• May Cotton Up 64 Points • Export Sales Provide a Boost • U.S. and China Economies Show Strength • Hopeful News on the Trade Front
Prices continued to slowly climb higher this week, setting a new 15-week high today when May futures touched 78.48 cents per pound. Lack of positive news had the market slowly drifting lower through Wednesday.
At the moment we are still seeing a fairly even match between spec buying and trade selling, and until one of these two forces gains the upper hand, the market may not move that much.
However, given the shrinking supply in major origins and the risk-on mentality in financial markets, we feel that the downside is limited to 75 cents, while the upside still holds some potential for move into the low 80s.
India – Cotton prices traded firm on slow selling from ginners and weak arrivals in the market yards. As per the Cotton Corporation of India (CCI), arrivals for 2018‐19 season reached 25.03 million bales as of March 26th, down 4.6% on y‐o‐y. Active import demand is being noticed from Southern mills and import businesses were reported for West African origin for April/May shipments at 85.00‐87.00 c/lbs, CFR Tuticorin.
Global Consumption Projected to Reach Record High in 2019/20
·Despite persistent challenges, global cotton consumption should reach an all-time high in 2019/20 ·World production should rise to 27.6 million tonnes, boosted in part by a 6% increase in global yields · Ending stocks are projected to increase slightly from 2018/19 to 17.7 million tonnes · ICAC’s price projection for the A Index at the end of 2019/20 is 81.25 cents per pound, with a forecast range between 60.71 to 94.23 cents per pound
Market Movement from 25th Mar 2019 to 30th Mar 2019
• Again, volatile week on cotton futures. Both Indian and New York futures remained very volatile on trade deal, US cotton plating estimates and US export sales. Overall NY Cotton May Future gained 103 points (1.30%).
Cotton futures relieved their seriously overbought conditions and charged ahead to near the prior week’s settlements. Reasonably good export sales and shipments were positive for the market.
• Trade Rumors Reported, But Concerns Remain • Export Report Disappoints Some • Economic Warning Signals From Brexit • Planting Intentions Report a Shocker
Prices rallied to a fresh 14-week high this week with May futures trading to 77.98 cents per pound. Semi-positive rumors about trade negotiations helped the rally Monday and Tuesday, but the market backed off the highs Wednesday following talk about possible delays in negotiations.
USDA Springs Bullish Surprise On Market Participants
The most pertinent international news for cotton continues to involve China. US trade representatives were in China on Mar 28 and 29, with Chinese negotiators expected to visit D.C. next week. Sentiments continue to oscillate between positive and mildly discouraging. We had hoped that the Mueller report (which provided indications of neither collusion nor obstruction of justice) might incentivize the Chinese to become more receptive to the US Administration’s demands
Cotton prices were influenced by the swine flu disaster in China and its spillover into all commodities. The price rally continued higher as fund managers gave up their attempt to drag prices lower and the ensuing short covering sent the bears running for cover as they exited losing positions. While the rally moved to 78 cents, basis there nearby May contract, it met rather stiff price resistance on an attempted move to 78.50 cents.
CHINA SHOPPING FOR COTTON TO REPLENISH ITS DWINDLING RESERVES?
The most pertinent international news for cotton on the week again involved China. Early in the week the general expectation was for a deal to be reached no sooner than late spring/early summer, but on Friday there was an announcement that several memorandums of understanding regarding trade between the two countries had been signed, which is a very encouraging sign.
Market Movement from 18th Mar 2019 to 23rd Mar 2019
• Global cotton market gives sign of some bullish fundamentals. NY Future settled slightly lower on Friday after previous session's 2 percent rally to three-month highs which was triggered by short covering by specs. Overall NY May Future gained 108 points during this week, its fifth consecutive weekly gain.
• Export sales were as required but pace of shipment is still lagging behind to achieve export target.
Futures prices surged to their highest level since December this week. The May contract added 108 points from last Friday’s close to settle at 76.58 cents per pound. While volume picked up Thursday as the market touched the fresh high of 77.82 cents, slow trading earlier in the week kept the total volume low.
Days of sunshine with tractors stirring up dust are enough to knock the rust right off your soul. You can sense it when talking to growers, there is a lift in their voices and a chuckle or two now and then.
That’s a welcomed feeling after a grueling and depressing past several months. Dissolved of the hangover of 2018, sights are now set on the bountifulness a new crop can bring. Resiliency has and always will be the cornerstone of our industry – something I revere most about all those involved with it.
India – Gujarat 29mm cotton traded firm from last week, reported around INR 44’000 per candy equivalent to US Cents 84 per lb FOB Mundra based on prevailing exchange rate. The USD-INR pair continues to trade firm and tested the 7-month low at 68.34, mainly due to overseas fund inflows into Indian equities and positive trade deficit data. In short term, we can expect recovery to 69.50 to 70.00 area, but the overall trend remains for a stronger Indian rupee.
A week or so ago, as I left early one morning for work, the fog was so bad you literally could not see how to drive. Literally, every foot down the road at not more than 20 mph was an unknown and an accident just waiting to happen.
For 35 days, the partial US government shutdown kept markets in a fog due to USDA reports and data not being available. Those reports and data are being or have been caught up now.
Benchmark prices were flat or slightly higher over the past month.
Prices for the May NY futures contract increased over past month, climbing from levels just below 70 cents/lb in mid-February to those near 74 cents/lb recently.
Global Consumption Growth Projected to Slow to 0.04% in 2018/19
• Global consumption growth is expected to slow to 0.04% • Growth in mill-use in East Asia is expected to slow to 6% • Mill-use expansion in Bangladesh is expected to slow to 7% • China’s consumption growth is expected to slow by 8% • Consumption is expected to increase by double digits in Turkey, Indonesia and Uzbekistan
While corn remains the major safrinha crop for Brazilian farmers, more cotton acreage is being planted in Mato Grosso this spring, as well.
Over the past two years, cotton planting has increased by nearly one-third for the safrinha in Mato Grosso. The Brazilian Association of Cotton Producers(Abrapa) forecast cotton acreage to grow to 1.4 million hectares (3.46 million acres). Mato Grosso accounts for about 88% of Brazil’s cotton production.
Historical Revisions to Indian's Cotton Balance Sheet - USDA
Historical Revisions to Indian's Cotton Balance Sheet - USDA
Historical revisions have been made to India’s balance sheet for the years 2002/03 through 2013/14, with the stock adjustment carried forward. The revisions are based on the conclusion that market yard arrivals data underreported arrivals in the early portion of the harvest season. This conclusion was based on observed market activity in November for several years.
Online Kapas Sale Procedure With regard to online Kapas sale, following modus operandi may be followed: 1. Online Kapas sale can be undertaken broadly on the same lines as per the online cotton seed sale system followed by the Corporation at present, i.e. kapas may be sold online on per qtl. basis to the registered buyers. 2. For registration, the buyer has to pay refundable security deposit of Rs 5 lacs and shall have to obtain digital signature for participation in e-auction. ......
