Cleveland: Don’t Expect the Cotton Market to Be in a Hurry
Cleveland: Don’t Expect the Cotton Market to Be in a Hurry

Cleveland: Don’t Expect the Cotton Market to Be in a Hurry

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Το περιεχόμενο του άρθρου δεν είναι διαθέσιμο στη γλώσσα που έχετε επιλέξει και ως εκ τούτου το εμφανίζουμε στην αυθεντική του εκδοχή. Μπορείτε να χρησιμοποιήσετε την υπηρεσία Google Translate για να το μεταφράσετε.

By Dr. O.A. Cleveland 

The market tried its hand at 91-92 cents but could not generate a close above 93 cents. Yet, it was refreshing that support surfaced at the 90-cent level. Prices will continue to batter the 93-cent wall. It will likely take a few attempts to smash through it. Crop conditions will be the impetus that propels the market through the 93-cent barrier. Volume short covering above that mark will give traders a look at the 96-98 cent range.

The U.S. crop is shrinking. The massive Texas, New Mexico, Oklahoma, and Kansas acreage is burning up. The Mid-South and Southeast crops are good and getting better. The Mid-South does have a mixed crop, but fruit set has exploded over the past two weeks. Yet, one can also find far too much acreage “blooming at the top” for this time of the year. The Southeast crop is excellent.

Nevertheless, both the Mid-South and Southeast crops have a long way to go. Expect December futures to break through the 93-cent price barrier, move to challenge the 98-cent mark, and make a run to the dollar mark.

The Mid-South crop continues to be plagued by the hot, dry winds coming from the northwest which further dry the crop and add to stress. Years when such winds prevail have historically been associated with lower yields. However, both the Mid-South and the Southeast were blessed with both May and June being hot and dry. Thus, the root system drove deep into the ground and is finding excellent subsoil moisture. If the northwest winds subside, then the Mid-South crop has excellent potential.

The progress being made in the Southeast and Mid-South is being offset by the continuing disaster in the Southwest. As stated last week, the U.S. crop can easily fall to 14.5 or 14.0 million bales due to the drought disaster there.

Yet, more mills complain of slowing orders and increasing inventory of stocks. It is likely that world consumption will have to be further lowered in forthcoming USDA supply demand reports. However, it is expected that the decline in world crop size will more than offset the weaker yarn market. Nevertheless, declining carryover stocks will support higher prices.

The beginning of August is around the corner, meaning it’s time for the cotton market to slip into its August doldrums as traders take holidays. The last two weeks have suggested such. However, trading ranges have remained in the 400-to-550-point range, and that should be enough to keep traders interested.

Yet, to repeat, the market will simply back and fill until it can break above the 93-cent mark. Don’t expect it to be in any hurry. Possibly, the break above the 93-cent price resistance will not occur until after the September USDA supply demand report.

The latest on-call report indicated that mills did not take advantage of the market’s fall below 90 cents. I would have expected mills to have been somewhat aggressive with price fixations. The report showed “zero” fixations. That bears watching.

Patience. Patience. Patience.

Give a gift of cotton today.

Dr. O.A. Cleveland is professor emeritus, Agricultural Economics at Mississippi State University.

Πηγή: Cotton Grower

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