Rose on Cotton: Supply and Demand Always Rule
Rose on Cotton: Supply and Demand Always Rule

Rose on Cotton: Supply and Demand Always Rule

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Το περιεχόμενο του άρθρου δεν είναι διαθέσιμο στη γλώσσα που έχετε επιλέξει και ως εκ τούτου το εμφανίζουμε στην αυθεντική του εκδοχή. Μπορείτε να χρησιμοποιήσετε την υπηρεσία Google Translate για να το μεταφράσετε.

The bulls posted a modest weekly win, thanks to a strong burst on Friday; the Dec contract picked up 53 points to finish at 84.45. The Dec – Mar spread again weakened, but remains inverted at 17.

The market seemingly spent much of the week focused on US/China trade relations, which have not improved, and have likely fallen under greater strain, over recent weeks. Initial tariffs promised by the Trump administration are now in place, with more likely to come. Some of Friday’s strong performance can most certainly be attributed to the release of decent US export sales and strong shipment data and to forerunning of next week’s July WASDE report release. The overnight reduction of ICE certificated stocks to less than 32K bales also likely was a supportive factor on Friday.

Total net sales and shipments against the 2017/18 MY for the week ending June 28 were higher Vs the previous sales period at approximately 19K and 423K running bales, respectively. Shipments were well ahead of the pace required to meet the USDA’s 16M bale export projection. Total sales against 2018/19 were significantly higher Vs the previous sales period at around 234K RBs; sales against 2018/19 currently stand at a running total of nearly 5.8M 480lb bales.

While it is true that new crop sales have slowed over recent weeks, this is not seasonally unusual and we think that merchants are wary of over committing to deliveries amid a US supply picture that remains quite uncertain. We continue to project 2017/18 exports at 16.4M 480lb bales.

The USDA will release its July WASDE report on Thursday, July 12 at noon, ET. This will be the last report of the year prior to USDA-NASS taking over domestic production projections via its objective yield program, which is combined with monthly survey data for some locations.

EXPORTS and TRADE

At this time, we expect US production and exports for 2018/19 to be projected significantly lower Vs June, with the reduction in production expected to be significantly greater than that for exports, resulting in a significant reduction in projected domestic ending stocks; ditto for the aggregate world balance sheet.

The aforementioned tension over US/China trade relations is anything but a clear and well-defined phenomenon. On the domestic front, the President’s propensity for hyperbolic rhetoric and chaos make it difficult, if not impossible to base predictions on the behavior of previous US administrations and Chinese reactions. Simultaneously, the interconnections of the US and Chinese economies make it far more difficult to analyze any single commodity or tariff as an isolated phenomenon.

Between the necessity of US consumer demand for Chinese textiles and the increasing Chinese reliance on yarn spun in Vietnam and Bangladesh, trade substitution could potentially offset the impact of direct tariffs on raw cotton.

For next week, the standard weekly technical analysis for and money flow into the Dec contract are bearish. However, it will likely be the WASDE report and further US/China trade developments that move the market by the greatest magnitude next week. Too, at this point of the growing season, weather is always a potential factor.

Have a great weekend!

Πηγή: Agfax

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