Market Comments – August 29, 2019

Despite the market’s wild gyrations we haven’t gone anywhere, as December has now closed the last four Thursdays within a 68-point range, between 58.94 and 59.62 cents. This is not likely to change anytime soon, as the US loan continues to provide support at around 57 cents, while a move to the upside would have to overcome massive grower selling.

Market Comments – July 25, 2019

It looks like the market has made at least a temporary bottom last week, when it posted back-to-back lows of 61.66 and 61.67 cents and then bounced. However, while some light short-covering and call options buying has given the market a lift, we need to see greater buy-side liquidity in order to generate some lasting upside momentum.

Market Comments – July 4, 2019

Since speculators seem to be losing their power to force the market any lower and with growers not willing to chase values below 65 cents at this point in time, it could set the stage for some short-covering rallies. However, the trade is extremely under-hedged at just 2.34 million bales net and it would therefore take a tremendous amount of buying power to push the market through all the scale-up trade resistance.

Market Comments – June 27, 2019

By and large the market is still stuck in a 400-point trading range, as growers are unwilling to sell the market below 6500, but are waiting for rallies towards 70 cents to do so. Speculators are still holding a sizeable net short position, but the loss of downside momentum and/or one of the potential triggers mentioned above could spark some spec short-covering and new buying.

Market Comments – June 20, 2019

A few months ago there was probably no one in the cotton trade that expected to see a 62-handle in July. We certainly didn’t! But an escalating trade war between the US and China, an increasingly bearish cotton balance sheet and speculators selling 16.3 million bales net since last June have forced the cotton market to its knees.

Market Comments – June 6, 2019

The trade needs to increase its net short in the futures market by a substantial margin, but that requires speculators to go net long again. However, with the chart still in bearish territory and with Trump fighting trade wars on several fronts, speculators seem to be in no hurry to reverse their position.

Market Comments – May 23, 2019

According to our calculations current crop supplies should be nearly sold out by now, depending on how many new crop sales are going to be shipped from existing inventory. This makes July a dangerous month to be short and we therefore wouldn’t rule out a spec short-covering rally over the coming weeks.

Market Comments – May 16, 2019

The US/China trade scare combined with a bearish technical picture has collapsed the futures market under the weight of heavy spec and index fund selling. However, this drop into the mid-60s has sparked sizeable export business as mills are filling in remaining needs and even bolster their inventories in some cases.