Cotton futures were mostly lower on Friday. December 2013 lost 20 points, closing at 84.72 cents. March 2014 lost 5 points to close at 84.41 cents. December 2014 gained 12 points to close at 79.43 cents. Cotton was basically flat on the week. The December 2013 contract gained all of 6 points.
There are no changes today in the advice. Here are some views about factors that influenced todayΆs trading.
The cotton close on the week was quite uneventful. Old-crop was down a little, but there wasnΆt much pressure from either bulls or bears. Once again December traded up to 85 cents, but it wasnΆt able to sustain that benchmark.
There were two major pieces of news this past week. Both occurred on Wednesday. In no particular order, 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 saw the news as inflationary and it resulted in some buying interest in commodities, including cotton. The dollar plunged.
China sparked buying interest on Wednesday. It may have only been symbolic, but on Wednesday 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. A few weeks back in August, the assumption was that China was planning to give subsidies to farmers over more stockpiling into the reserves. To address the resulting market confusion, the U.S. is asking China via an upcoming WTO Ag Committee meeting for information on stock levels, supports, and plans to manage the existing stocks.