Market Comments – November 1, 2018

The market made a nice move off the lows in heavy volume today, but we have seen these flash-in-the-pan rallies before. When we take a step back and look at the chart, we notice that December has settled the last 33 sessions in a fairly tight range of just 402 points, between 76.00 and 80.02. That dates all the way back to September 18.

Market Comments – October 25, 2018

It’s a tough call at the moment, because the cotton market is not really in charge, but relies to a large degree on what happens in the outside markets. Speculators have been selling over 9 million bales net since early June and they may not be done yet. They are probably down to a net long of around 2.5 million bales by now, but the last time we had the threat of a recession, in early 2016, speculators went to a 4.4 million bales net short position and the market traded in the mid-50s.

Market Comments – October 18, 2018

We feel like we are in a bull market with the hand brakes on. There are plenty of reasons to be friendly, but there is this fear that something bad is going to happen on the demand side. It is as if the market was telling us ‘never mind a couple of million bales less production, mill use is going to drop by a lot more than that’. Whether trade wars, emerging market problems and stock market jitters will indeed cut into the demand side remains to be seen, but we’d rather be long than short going into the December notice period at current prices.

Market Comments – October 11, 2018

While the US faces losses and quality problems in the Southeast, which accounts for about a quarter of US output, the global economy is confronted with an emerging market crisis, trade disputes and as of yesterday jittery stock markets. While both developments have the potential to move the market, we feel that fear of lower mill use in the wake of all these economic problems carries the greater weight at this point, especially when it comes to speculators, who seem to turn their backs on industrial commodities.  

Market Comments – September 20, 2018

After we saw some weakness in fundamentals recently, the technical side followed suit this week by crashing through key support. For now it looks like this was just a necessary washout that realigned futures prices with reality. The fact that open interest held relatively steady, export business picked up and that there were still 15 million bales to fix as of last Friday gives us some confidence that the market has simply moved to a lower trading range of somewhere between 76-81 cents, rather than the beginning of a cascade in prices.

Market Comments – September 6, 2018

So where do we go from here? For now there is still plenty of support underpinning the market. The 14.95 million bales in unfixed on-call sales, the Indian MSP (Minimum Support Price) and the 200-day moving average at 80.00 cents act like a dam that holds the market back. However, these emerging market problems are like cracks appearing in this dam and only time will tell whether they can be repaired or whether there will eventually be a breach.

Market Comments – August 30, 2018

The market has very little momentum at this point and given the statistical situation this is not expected to change anytime soon, unless something were to drastically change in the supply/demand outlook. With crops about to come off the fields, supplies should be plentiful for a while and a potentially bullish scenario will probably have to wait until the 2019 planting season.

Market comments – August 16, 2018

From a technical point of view the market has broken through all kinds of important support levels this week, starting with the long-term uptrend line at around 8400 and then the July low of 8175. The last line in the sand is the 200-day moving average at just over 7900, which is often used as an important tool by long-term speculators. So far spec liquidation has been moderate, as open interest has only declined by about 10k to 261k, but the market needs to quickly prove itself if it wants to avert further damage.

Market Comments – August 9, 2018

Improved conditions in West Texas and the US/China trade standoff have weighed on the market this week, but the slightly higher open interest suggests that it wasn’t liquidation that forced prices lower. Instead it was probably an absence of buying that allowed the market drift south, as the 15.6 million in unfixed on-call sales (5.2 million in December alone) are still adopting a wait-and-see attitude.

Market Comments – August 2, 2018

Support looks quite solid in the mid-80s, as the US cotton pipeline will basically be empty by the time new crop arrives, mills have a massive amount of fixations to do, global stocks are decreasing, inflation is increasing, specs and index funds seem to have staying power and demand remains robust. It would therefore take a geopolitical or economic event to flip this market on its head.

Market comments – July 26, 2018

Not much has changed since last week, as most traders remain sidelined. Mills are still hoping for another dip into the low-to-mid 80s to get some of their fixations squared away and are therefore not in any hurry to chase prices higher. Speculators are not active either in this dull market and are waiting for new momentum before jumping back into action.

Market Comments – July 19, 2018

The low volume shows that the major players remain sidelined for now. After last week’s rebound speculators have no reason to abandon their long position, while trade shorts are patiently waiting for a break in prices. Until something changes the status quo, we anticipate more of the same boring sideways action. Support seems to have moved up to around 84/85 cents, while resistance is at around 89/90 cents. Expect the market to trade within these boundaries in the foreseeable future! 

Market Comments – July 12, 2018

The old adage to “never short a dull market” proved once again to be true . The market has held crucial support near 82 cents and then started to lift off. This means that the spec long, which still measured 9.0 million bales net as of last week, is likely to increase again. Meanwhile trade shorts are kicking themselves for letting another opportunity pass by and some traders are starting to fear this market.