Market Comments – November 9, 2017

Today’s WASDE report didn’t give the market a reason to break out from its current trading range. On the one hand we still have a sizeable seasonal surplus and an inventory buildup later in the season, but on the other hand mill demand has now risen to a plateau of nearly 120 million bales, which requires continued near-record crop production in the ROW going forward. 

Market Comments – October 26, 2017

The increase of Gujarat’s MSP combined with some potential freeze losses in West Texas this weekend won’t add up to a bullish market, but they may make it a little less bearish. In other words, we may deal with a slightly higher trading range going forward, with March possibly holding near the mid-60s instead of the low-60s. The upside looks limited until we have cleared the extra inventory, which will only start to happen once China enters the scene as a stronger importer. 

Market Comments – October 19, 2017

The path of least resistance seems to be down. Crop pressure is starting to build and the technical picture is now pointing lower as well. Mills need to fix a record amount of cotton but will probably take their time and do so on a scale down basis only. This should open the door for a move into the mid-to-low 60s, maybe not for December, but certainly for March. Only a last minute problem in West Texas or India would alter this scenario in our opinion.

Market Comments – September 28, 2017

There is currently a shortage of cotton in the cash channels and the basis for early arrivals is therefore quite strong. Only once the crop has moved in and nearby commitments have been applied will the market start to feel some pressure. This will probably not be the case before the second half of November or early December. We therefore see December futures well supported, while March should eventually start to feel the crop pressure. 

Market Comments – August 31, 2017

Markets don’t like uncertainty and right now there is plenty of it! With an almost empty supply pipeline and with some of the early arrivals falling prey to bad weather, the margin for error has become rather thin. Heavy rain in the Delta at the moment and possibly another storm system bringing more unwelcome moisture next week are likely going to impact the quality of the 4.0 million bales grown in that region.

​​​​​​​Market Comments – August 3, 2017

The market advanced on some spec short covering this week and may eventually test major resistance at 7200 over the coming days or weeks. However, from a fundamental point of view there is no reason for traders to chase prices higher, since the crops are still holding on to their potential. Many producers are waiting for a chance to hedge their output in the 70s and there are plenty of scale-up sell orders already in place.

Market Comments – July 6, 2017

We feel that the onslaught of spec selling is over for now and that the trade isn’t going to sell the market in the mid-60s either. There are simply too many early commitments on the books and with the crop being drawn out and slightly behind schedule we don’t expect any supply pressure until early 2018.