Cleveland on Cotton: Finding a Sustainable Market is the Issue
Cleveland on Cotton: Finding a Sustainable Market is the Issue

Cleveland on Cotton: Finding a Sustainable Market is the Issue

A- A+
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.

By O.A. Cleveland, Consulting Economist, Cotton Experts

Tariff concerns and traders’ multiple views regarding the tariff continue to dominate cotton price direction, both up and down.  Meanwhile, world supply demand fundamentals appear to provide a firm price bracket for price movement.

The 3-plus cent trading range from 76 cents to 79.50 cents stills keeps prices restrained within that narrow range.  The world crop is slowly being down sized, but tariff related restrictions on demand have a firm choke hold on cotton’s attempt to break higher.  U.S. exports sales remain limited and the delivery of Indian and Chinese cotton to local points is satisfying immediate pipeline needs.  Look for the trading range to continue.  Yet, also continue to expect the U.S. Chinese tariff discussion to dominate price action at least through the end of November.

The U.S. crop continues to be blindsided by unwelcomed rains that have appeared on a weekly basis throughout the Southeast, Midsouth and Southwest.  Due to the rains the U.S. high quality has already been harvested and both mills and merchants are searching for those few uncommitted bales that always surface.

With the 2018 Australian crop already committed the only high quality available to the market is generally the Brazilian growth.  Of course, fill in needs can still be sourced from Africa.  Greek high quality moved to China in the place of U.S. and is now in limited supply.  The Chinese have aggressively brought Brazilian as a substitute for the tariff blocked U.S. growths that would have been sold there.

Thus, the tariff has switched the traditional role of U.S. cotton from being the most sought after growth to the growth of last resort.  Never mind that the high quality color grades (middling) were limited by Mother Nature’s abundance of moisture on the crop at untimely intervals.

The U.S. will eventually move in the export market, but most had expected the movement to have already begun.  Again, the available supply of new crop in both India and China have moved very well to local mills.  Yet, that just simply says that the back months of the marketing season will be a busy period for U.S. sales.

This week’s export sales report revealed negative net sales of 49,000 RB as cancellations totaled 111.4 million RB (China 88,000).  Thus, current marketing year sales of Upland were 62,400 RB.  The market ‘assumes” the tariff dispute will have ended by the 2019-20 marketing year as sales for the next marketing season were 109,800 RB.  Notably, China simply rolled its 88,000 RB purchase for 2018-19 to the 2019-20 season.

As has been stated for several weeks, look for the Indian crop to be reduced in the November supply demand report.  The Chinese crop will likely be unchanged while the U.S. crop is expected to fall only some 200,000 bales, mostly due to changes in the Southeast.

The current 76.00 to 79.50 cent range will likely hold through the month in anticipation of some cooling of the tariff situation.  However, market bias is higher.  Yet, as stated a month ago, it will be a lot like sitting in the dental chair as the market grimaces and grinds higher.  Nevertheless, the U.S. must determine where it can find a sustainable market for U.S. cotton or else!

Give a Gift of Cotton Today

Πηγή: Agfax

Tags

newsletter

Εγγραφείτε στο καθημερινό μας newsletter