Cotton futures were higher on Wednesday. December 2013 gained 110 points, closing at 85.54 cents. March 2014 rallied 99 points to close at 85.14 cents. December 2014 gained 38 points to close at 79.93 cents.
There are no changes today in the advice. Here are some views about factors that influenced todayΆs trading.
Cotton prices were trading moderately higher on Wednesday heading into late trading. At 2 PM EDT, the Federal Reserve jolted the market. The Federal Reserve announced that it would continue its $85 billion per month bond buying program. The accommodative monetary policy was a surprise in light of the fact that many economists had expected that the Fed would begin slowing the buying pace. That is the so-called “tapering”. Some traders see the news as inflationary and it resulted in some late session buying interest in commodities, including the grains and cotton. The dollar plunged. The stock market soared into record territory from the standpoint of the widely followed Dow Jones Industrial Average.
Recent news from China on its cotton buying program was viewed as bullish. It may have only been symbolic, but ChinaΆs state reserves bought its first 2013-crop domestic cotton. The total was only 780 tonnes. However, if China continues to buy and grow its domestic stocks for a third straight year, it shifts the perspective of the world cotton market to being much more bullish than if China stops the buying, or shows signs of actually releasing stocks into the market place.
China also announced that it had imported 276,000 tonnes in August. That was down about 10% from August 2012. For the calendar year, imports total 3.03 million tonnes and those are down 19.7% YOY.
On Tuesday, USDAΆs Farm Service Agency released its updated report on certified planted and prevent planted acreages this morning. Cotton plantings for the 2013 harvest totaled 10.083 million acres. That number needs to be placed in context. Not all farmers are in the government farm programs, so not all cotton acres are reported. Over the past 2 years, final USDA planted acres have totaled about 250,000 more than the September update from FSA.
That implies that final cotton plantings were over 10.3 million acres, and that is the USDA forecast at 10.337 million. The market is not likely to be too concerned about the planted acreage portion of the equation going forward. Instead, attention will remain on the yield and abandonment prospects.
Doane economists issue brief announcements of market impacting news most days on Twitter at DoaneAg. It is a place to catch quick updates on market moving news, such as the crop progress reports or weather forecast changes, and then followed later with these more extensive commodity write-ups.