ICE Cotton futures fall as Sally induced crop damage worries ease
ICE cotton futures fell on Thursday, as worries about a potential crop damage from Hurricane Sally decreased, while weaker exports further weighed on the prices of the natural fiber.
Cotton contracts for December fell 0.28 cent, or 0.4%, at 66.09 cents per lb by 12:34 p.m. EDT (1634 GMT). It traded within a range of 65.64 and 66.55 cents a lb.
Adjustments were made today that should be favorable for prices. USDA has now moved closer to what the “boots on the ground” have said along. This should help provide support for the market.
Like a prizefighter with a cast iron jaw, the cotton market has taken punch after punch in recent weeks but still have come off the ropes swinging. Since April, every 2- or 3-cent gain has been followed by a 1- or 1.5-cent decline.
USDA rewarded my two-week-old price flip-flop with Friday’s release of its September world supply demand report. While both world and U.S. stocks were lowered, the reductions came from the supply side of the price equation.
COTTON MARKET SETTLES EFFECTIVELY UNCHANGED FOR SECOND CONSECUTIVE WEEK; SALLY CHURNING IN THE GULF
September 14, 2020
The ICE Dec cotton contract gave up 18 points for the week ending Sept 11 finishing at 64.81; the Dec – Mar switch was effectively unchanged at (97). Last weekend, our proprietary model (timely results provided in our complete weekly report) predicted a finish that would be near unchanged to lower Vs the previous Friday’s settlement, which proved to be correct,
DECEMBER FUTURES SETTLE UP AT END OF SHORTENED TRADING WEEK
• Export Sales Report Continued Previous Months’ Pattern • USDA Cut U.S. Production Estimate in WASDE Report • Possible Effects of Recent Weather Front of Mind
The market is still devoid of any strong selling, as index funds continue to accumulate longs and the trade is probably going to transition to a net buyer of futures once the crops are in. This leaves only speculators as strong potential sellers.
The 2020/21 U.S. cotton estimates include slightly higher beginning stocks relative to last month but lower production, mill use, exports, and ending stocks. Production is lowered 1.0 million bales to 17.1 million, with a lower projection for every region. Mill use is projected 200,000 bales lower this month, but compared with its revised 2019/20 level is still expected to rise 16 percent. Exports and ending stocks are 400,000 bales lower, reflecting reduced U.S. supply and stronger foreign competition.
Cotton prices are once again looking vulnerable and on an uncertain path to who knows where. Dec futures closed down 97 points today after pretty much treading water last week thanks to a good day on Friday. The market all of a sudden looks to have lost some of its upward steam. But, this is the repeating choppy pattern of the past 5 months — make a run then retreat a bit, make another run then retreat a bit, make another run then retreat a bit.
COTTON MARKET SETTLES EFFECTIVELY UNCHANGED ON WEEK; SEPTEMBER WASDE RELEASE ON FRIDAY
September 07, 2020
The ICE Dec cotton contract gave up 9 points for the week ending Sept 4, finishing at 64.99. The Dec – Mar switch weakened (98) but remains well below full carry. Last weekend, our proprietary model (timely results provided in our complete weekly report) predicted a finish that would be near unchanged to lower Vs the previous Friday’s settlement, which proved to be correct.
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.
Market Movement from 31st Aug 2020 to 05th Sep 2020
• This week was volatile and bull dominated week. NY December Future was able to cross 66 cents psychological level and made double top on 66.44 cents, but was not able to sustain and close over 66 cents. Weaker dollar and spec buying pulled NY futures but ultimately week ended with win-win at 64.99 Cents losing 9 point a week.
• U.S. Export Sales and shipment was good. Big quantity of shipment to China.
• Prices Unable to Hold Gains This Week • Continuing Jobless Claims Decreased by 1.24 Million • China is Week’s Top Buyer of U.S. Cotton • More Rain Forecasted, but Uncertain
Once again, cotton is pushing 66 cents. Prices (Dec futures) have not been able to successfully break (close above) 66 cents although trying a few times recently. Dec gained 58 points last week and thus far is up another 148 points this week (thru Tuesday, September 1)—closing at 66.34 cents today.
Prices have made a steady but choppy trend up since early April. August was a good month—Dec futures gaining 335 points during the month.
Spec and index fund buying has been propping the market up, but trade selling has capped the rally near 66 cents and forced a retreat. With outside markets looking shaky at the moment, we don’t expect specs to chase cotton prices higher at this point.
Support is most likely going to come from scale-down fixation buying, but this could change if outside markets were to switch into ‘risk off’ mode.
Changes in Supply and Demand Estimates (from 17 August 2020)
Limited Cotton Recovery within Pandemic: Production and Stock Levels High, Slow Consumption Growth
Even as the most stringent containment measures begin to be lifted, the opportunity for economic recovery may not relieve current market uncertainty. Countries vary in their ability to flatten the contagion curve and the fiscal space to mitigate the pandemic associated recession.
Growers were greeted this past week with an excellent pricing opportunity, whether it was for old crop or those looking to forward price new crop. Following a jump in the LDP to 340 points, the December futures contract closed above 66 cents on Tuesday before ending the week at 65.08.
COTTON MARKET SETTLES HIGHER ON WEEK, BUT HURRICANES LOOK LIKE ANOTHER “BUY-THE-RUMOR, SELL-THE-FACT” EVENT
August 31, 2020
The ICE Dec cotton contract picked up 80 points for the week ending Aug 28, finishing at 65.08 even as the contract breached the 66.00 level over the course of the week. The Dec – Mar switch was strengthened a bit at (85).
Market Movement from 24th Aug 2020 to 29th Aug 2020
• China cancelled some old US cotton bargain but purchased new contract in weekly export sales. US Export Shipment was lower but good number of shipments to China is a positive sign for market.
• Continuing Jobless Claims Fell About 300,000 to 14.5 Million • Texas and Oklahoma Crop Conditions Slipped Sharply This Week • Assessing Damage from Hurricane Laura
Futures rallied to a fresh six-month high this week. Last Friday’s trading range was one of the smallest ranges in several weeks, but Monday made up for it. December futures surged as the market grappled with the possibility of two hurricanes in the Gulf of Mexico at the same time.
Flip Flop!! The opening sentence last week was, “The Big Bear.” Finally, I am happy again. The Big Bull.
Prices are going up and 2021 plantings are going up. While near-term fundamentals remain bearish, a bull beginning to grow, and he will reach maturity.
Two tropical systems caused the market to trade in typical ‘buy the rumor – sell the fact’ fashion this week, and now that the storms are gone without inflicting much harm, we might see prices pull back some more from here.
Dec20 futures knocked on the door of 66 cents (closed at 65.82 cents per lb) today—the highest daily close in 6 months. Dec gained 1.43 cents last week on weather concerns and a good export report and gained another 1.54 cents today.
Movement in benchmark prices was mixed over the past month.
The NY December futures contract moved lower (to below 60 cents/lb in late July) and then higher (near 65 cents/lb in early August) over the past month. Current values (63 cents/lb) are nearly even with those from one month ago.
This month’s 2020/21 U.S. cotton outlook includes higher beginning stocks, production, and ending stocks, and a decline in consumption. Production for the 2020 crop is raised 3 percent to 18.1 million bales, on NASS’s first survey-based production forecast. The survey indicates lower harvested area and higher yield compared with last month’s expectations. Abandonment is expected to rise to 24 percent—compared with 16 percent in 2019.
A cyclonic circulation is over East Uttar Pradesh and adjoining area. Another cyclonic circulation is over Central Pakistan. A trough is extending from central Pakistan to Bangladesh across Rajasthan, South Uttar Pradesh, Jharkhand and West Bengal in lower levels. A cyclonic circulation is over central parts of Assam. A cyclonic circulation is over south Konkan. A shear zone is extending from this cyclonic circulation to Chhattisgarh across North Interior Karnataka and Telangana.
U.S. producers will plant 13 million acres in 2020
U.S. cotton producers intend to plant 13 million cotton acres this spring, down 5.5% from 2019 (based on the U.S. Department of Agriculture’s February 2020 estimate), according to the National Cotton Council’s 39th Annual Early Season Planting Intentions Survey.
Cotton Inc. Executive Cotton Update - February 2020
Executive Cotton Update - February 2020
Macroeconomic Overview: The Bureau of Economic Analysis estimates that the U.S. economy grew 2.3% in 2019. Forecasts suggest that growth could slow a little in 2020, with many projections falling between 1.9% and 2.1%. For comparison, in 2018, growth was 2.9% and in 2017 growth was 2.4%.
Highlights from the Inaugural Session of the 78th Plenary Meeting:
Consumers today are increasingly demanding information on the origin and history of the products they buy, putting pressure on retailers to provide transparency
Multiple technologies have the potential to provide that traceability, including blockchain and a host of products from private companies
Gujarat cotton crop is estimated as 1,06,94,302 Bales out of which 2,75,000 Bales will be of V-797 rest will be Shankar-6. Gujarat cotton crop yield is expected to rise by 32.97% and crop is expected to increase by 30.83%
we estimate total Gujarat cotton pressing to be 120-125 Lakh Bales of 170 Kg.
The Season 2018 -2019 started with bullish sentiment in India. Indian cotton crop was predicted 343 lakh bales at the start of the season against 365 to 375 lakh bales of season 2017-2018. Opening stock was low and mills requirement of new cotton was high. With bull sentiment season touched double top at 47,150 on 15th October at the start of the season.
Post estimates marketing year (MY) 2019/20 cotton production at 29 million 480 lb. bales (37.1 million 170-kilogram bales/6.3 MMT) with a planting area of 12.7 million hectares. MY 2019/20 mill consumption remains weak as mills accumulate greater cotton yarn stocks due to poor demand. Export prospects have diminished while imports are expected to remain stable as they are price competitive against domestic supplies.
The latest U.S. Department of Agriculture (USDA) estimates indicate that total U.S. cotton textile and apparel trade rose during the first half of 2019, compared with the corresponding 2018 period. U.S. cotton product imports totaled the equivalent of 9.0 million 480-pound bales of raw cotton during January-June 2019—compared with 8.8 million bales for the first 6 months of 2018—while cotton product exports declined slightly to 1.7 million bale-equivalents.
Cotton Textile exports reached a level of USD 739.17 million in June 2019 marking a decline of (-) 30.4 per cent against the corresponding month of June 2018, wherein exports were valued at USD 1,061.96 million.
In rupee terms, exports during the month of June 2019 reached a level of Rs. 5,132.72 cr. as against Rs. 7,199.39 Cr. in June 2018 marking a decline of (-) 28.7 per cent in rupee terms.
China cotton imports in 2019/20 are expected to surpass the previous year’s robust level, reinforcing its position as the world’s largest importer. The current 2018/19 estimate, boosted this month, is expected to be the largest in 5 years as China supplements domestic supplies amid ongoing auctions of State Reserve stocks. Despite this strong upward trend in imports, U.S. exports to China have weakened as Brazil, Australia, and other countries have expanded both exports and market share.
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.
