Agfax Buzz:
    April 20, 2012

    Cleveland On Cotton: Bears Focus on Carryover and Texas Drought

    AgFax.Com - Your Online Ag News Source

    By O.A. Cleveland, Professor Emeritus, Mississippi State University

    Cotton’s performance this week was well suited for New York, given the events on Broadway. Concerns about the upcoming May contract delivery period, coupled with continued improving numbers surrounding consumption and more news that expectations for 2012 Chinese plantings  shrink each week, supported prices all week.  Yet, with all that activity, December ended the week essentially unchanged. However, July, reflecting delivery concerns and the limited availability of old crop carryover, was some 200 points higher.

    The market opened its weekly trading with a very bearish tone, flip flopped and was very bullish on Wednesday and Thursday before settling down in Friday’s trading.  The near term remains in the bullish camp, but longer term the December 2012 and 2013 contracts still have a bearish technical tone as December must climb back above 91 cents before the speculative funds will rally to the contract. The long term bears are focusing on the very large volume of world carryover and the two year old consumption pull back. Yet, the long terms bears watch as the High Plains of Texas continue to parch and the drought spreads further into Rolling Plains. While the Rolling Plains generally has better moisture than a year ago, the region is generally classified as in a “moderate” to “severe” drought. Most of the High Plains remains in the grip of an “exceptional” drought, NOAA’s worst drought category.

     

    Additionally, the long term bulls point to the continued flight by Chinese growers from cotton to grain and oil crops.  Chinese estimates of a sixteen percent drop in 2012 plantings have hardened and some “official” data sources now place plantings down nineteen percent from a year ago and peg the crop at a maximum of 27 to 27.5 million bales, compared to 34 million bales in 2011. Too, more and more (but still the minority view) point to improved demand…And just like the remainder of the economy, cotton consumption is highly dependent on the health of the economy.

    Export sales have slowed considerably, given the higher prices of the May and now the July contract. While sales have been less than inspiring, recall that available U.S. stocks are low and are being somewhat rationed by the market. Mills had thought they could buy more below the 88 cent level and have backed away for now. However, shipments continue on track to meet the new USDA export estimate of 11.5 million bales, up 500,000 bales from the March estimate.

    Mills have made scant purchases to cover their requirements for new crop, to include the fourth quarter of 2012 and all of 2013. Good buying is under the market, but mills will play wait and see with respect to the U.S. moisture situation as well as plantings in the Midsouth and Southeast.  The coming month should continue to be very range bound and work the 87 to 90 cent level, basis December.

    Tags: , , , , ,

    Leave a Reply

    Name and Email Address are required fields. Your email will not be published or shared with third parties.

    Agfax Cotton News

    Texas Cotton Harvest – Still Some To Go – AgFax11-20

    Doane Cotton Close: Exports Continue Well Ahead of Pace11-20

    Mississippi: Water Conservation Summit, Stoneville, Dec. 1011-20

    Farm Internet Service Still Slow or Non-Existent, But Improving – DTN11-20

    AFB Cotton Close: Futures See Renewed Pressure11-20

    DTN Cotton Close: Dec. Hits 5-Year Low11-20

    U.S. Drought Outlook: Improvements Expected for California, Southwest11-20

    DTN Cotton Open: Slips to Slight Losses11-20

    U.S. Energy: Planned Refinery Maintenance Light in 201411-20

    Propane Stocks: Post Slight Increase11-20

    Gasoline Prices: Decrease by 5 Cents11-20

    Diesel Prices: Average Drops 2 Cents11-20

    Keith Good: Weather Brings Close to Upper Mississippi Shipping Season11-20

    California Crops: Yield Survey Reports On Cotton, Alfalfa And Tomatoes – AgFax11-19

    AFB Cotton Close: Unable to Break 60 Cent Resistance11-19

    Doane Cotton Close: Price Leak Continues11-19

    Farm Runoff Targeted for Regulation Following Algal Bloom Shutdown – DTN11-19

    DTN Cotton Close: Gives Back March Gains11-19

    Georgia: Diesel Prices Lowest in 4 Years11-19

    DTN Cotton Open: Futures Meander Slightly Lower11-19

    Keith Good: Farm Industry Divided over Immigration Executive Order11-19

    Farm Bill Commodity Program: Decisions and More Decisions11-18

    Doane Cotton Close: Further Price Erosion Likely11-18

    AFB Cotton Close: Futures Recover Slightly11-18

    Young Farmers: USDA Is the ‘Lender of 1st Opportunity’ – DTN11-18

    DTN Cotton Close: Finishes Near Day’s Highs11-18

    Tax Extenders: Farm Groups Push Congress to Renew Section 179 This Year – DTN11-18

    DTN Fertilizer Trends: Prices Show Little Movement11-18

    Texas Crop, Weather: 1st Freeze Comes at Good Time for Cotton11-18

    North Carolina: Bt Resistant Armyworms Migrating North11-18

    Georgia Cotton Commission Meeting, Production Workshop, Tifton, Jan. 2811-18

    DTN Cotton Open: Futures Trade Modestly Higher11-18

    Keith Good: GMO Corn Suits Mount for Syngenta; Armyworm Concerns Grow11-18