Corn and cotton futures continue to beat the bears.

 

The US Department of Agriculture’s Wasde crop report on Thursday offered investors an excuse to take prices of both down a few notches, raising estimates for US production to well above forecast level.

 

However, both contracts, while falling in the last session, recovered in this one – albeit for different reasons.

 

For cotton - while the Wasde was termed “bearish” by the likes of Rabobank, which highlighted “an unexpected hike” in the US cotton harvest estimate - the report at least offered the prospect of some price support in cutting the forecast for world ending stocks,

 

And by 1.5m bales to 90.88m bales, more than investors had expected.

 

‘Supportive to bullish’

 

Louis Rose at Rose Commodity Group focused on an upgrade in the Wasde, by about 1.25m bales to 119.25m bales, in the USDA’s estimate for world consumption of cotton in 2017-18.

 

This upgrade “is supportive to bullish, and we believe that much of the market’s resilience is rooted in strong demand for raw cotton”, Mr Rose said.

 

And, after all, the US is still having no trouble shifting cotton at these prices, with sales of some 219,000 running bales last week, meaning that the US has sold 63% of cotton needed to meet the USDA target for 2017-18, less than 30% of the way through the season.

 

Rabobank itself noted the support to demand prospects from demand prospects, “with continued global economic growth, plus a narrowing cotton/synthetic fibre price spread, amid higher prices of crude oil”, the basis of the likes of polyester.

 

Cotton futures for December stood up 0.9% at 68.87 cents a pound in lunchtime deals in New York, more than recovering losses in the last session, and indeed, crossing back above their 100-day moving average.

Source: Agrimoney