Cotton futures keep declining after US officials reduced expectations for this season's decline in world stocks. Behind the call was the sense of weak demand from China, whose imports will fall

The latest fall in prices follows the upgrade of 1.2 million bales, to 104.1 million bales, by the US Department of Agriculture (USDA) to its forecast for world stocks at the close of 2015-16. The estimate is the second highest on record.

This reflects weaker expectations for demand in China, the world's top cotton consumer. Domestic mills continue to be hampered by elevated domestic prices and in comparison with the man made competitor, polyester.

Source: www.investing.com, Spotlight Ideas

In 2016 so far the spot level of cotton has been under the 50 day moving average in every trading session. In contrast during December 2015 that happened just once.

This reflects the worsening outlook for Chinese cotton use given the low level of sales from Chinese State reserves, ongoing import restrictions, declining polyester prices, and a weakening outlook for Chinese economic activity.

This is compounded as the USDA also lifted its estimate for domestic inventories at the close of 2015-16, by 500,000 bales to 3.6m bales, thanks to a bigger-than-expected cut to export hopes, to 9.5 million bales.

Source: www.investing.com

Parameters: Cotton March 2016 CTH6 US Cents/lb

Entry:  Sell 58.33 14:54 GMT

Targets:  57.46 … 56.87 … 55.93

Stop:  61.50

Time horizon: Short-Term

— Edited by Clemens Bomsdorf