By O.A. Cleveland, Consulting Economist, Cotton Experts
Cotton prices ended the week moving to the downside, but with the weekly settlement showing a 24-point gain for the week.
The rather dull week was highlighted by the June WASDE report, which carried a bearish sentiment as world ending stocks were increased. More importantly, the report indicated a weakness in world demand, a key signal that suggests a weak market. Yet, the question remains as to whether the weakness has already been reflected in market pricing or whether more weakness is to come.
The 64-68 cent trading range remains in force and will likely remain so until Mother Nature plays another card on the crop development scene. Good cotton weather will pressure prices, but the trading range lows should hold until mid-July.
Higher prices await some positive demand news (possible) or unfavorable weather as the crop gets off to its start for the 2019 season. While there remains more than the normal weather stressed planting/emergence/stand problems in the U.S. and across the northern hemisphere, the crop is off to a okay beginning with essentially the entire growing season to catch up.
Pockets in the U.S. face moisture problems as does much of India, but such problems historically are not uncommon. Typically, Mother Nature relents and allows the crop to get planted. There is nothing atypical about a record crop struggling at the start.
Source: Agfax