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

    DTN Cotton Open: Trades on Modest Losses10-2

    Keith Good: Fight Against PED Virus Accelerates as Pork Prices Climb10-2

    DTN Cotton Close: Settles to Marginal Losses10-1

    Florida: Nematodes Create Problems in Multiple Crops10-1

    DTN Fertilizer Trends: State Averages for Anhydrous Vary Widely10-1

    DTN Cotton Open: Edges Higher within Tight Ranges10-1

    Keith Good: U.S., Brazil Reportedly Agree to Settle Cotton Dispute10-1

    Farm Bill Decision Deadlines and the Farm Bill Toolbox9-30

    Doane Cotton Close: Analyst Predicts 40 Cent Futures9-30

    AFB Cotton Close: Futures in the Red9-30

    DTN Cotton Close: Slips to New Lows9-30

    AgFax Cotton Review: Global Supply Hurts Prices; Cotton Transition Assistance Program Deadline Looms9-30

    Texas Crop Weather: Hay Supplies Range from Surplus to Practically Non-Existent9-30

    DTN Cotton Open: Trades on Slight Loss Near Low9-30

    Keith Good: ‘Misinformation’ Muddles Clean Water Act, EPA Chief Says9-30

    California: Rice Harvest Progress as Rains Move Through Northern Areas – USDA9-29

    AFB Cotton Close: Inside Day Finishes Lower9-29

    South Carolina: Rains Halt Peanut Harvest, Field Work – USDA9-29

    Alabama: Harvest Advances as Dry Weather Persists – USDA9-29

    Mississippi: Dry Weather Prevails, Good for Field Work — USDA9-29

    Arkansas: Corn, Rice Harvest Start to Wind Down – USDA9-29

    Georgia: Weather Causes Issues in Some Areas — USDA9-29

    Texas: Harvest, Wheat Planting Continue Among Widespread Rains – USDA9-29

    Oklahoma: Limited Moisture for Winter Wheat Seedlings – USDA9-29

    Arizona: Cotton Harvest Begins, Crop Condition Good — USDA9-29

    Doane Cotton Close: Harvest Progress Still Sluggish9-29

    North Carolina: Rains Delay Harvest, Corn Harvest 71% Complete – USDA9-29

    Kansas: Rains Slow Harvest, Wheat Planting – USDA9-29

    DTN Cotton Close: Finishes Inside Day Slightly Lower9-29

    Virginia: Rains Slow Corn Harvest – USDA9-29

    Tennessee: Good Harvest Progress, Pastures Need Rain – USDA9-29

    Soybean Harvest Rises by 7 Points, Corn 5 — DTN9-29

    Missouri: Corn, Rice Harvest Make Good Progress, Soybean Harvest Begins – USDA9-29

    DTN Cotton Open: Trades Near Unchanged in December9-29

    Tennessee Cotton: Forecast Looks Favorable for Defoliation9-29

    Flint on Crops: What is a Good Variety Worth?9-29

    Keith Good: Plunging Corn, Soybean Prices May Strain Farm Budgets9-29

    Rose on Cotton: Bearish News – We got plenty.9-26

    Cleveland on Cotton: Chinese Moves Send Market into Free Fall9-26

    Doane Cotton Close: May Dip Under 60 Before Reaching Harvest Lows9-26