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

    Tennessee Cotton: Defoliation Strip Trials9-22

    Flint on Crops: Wheat Deserves More Attention9-22

    Keith Good: Ethanol Industry Enjoys Big Year, but Uncertainties Linger9-22

    Rose on Cotton: Bears in the Woods; World Production Could Climb9-19

    Georgia Cotton: Wet Weather Causing Boll Rot, Hard Lock9-19

    Georgia: Rains Falling at the Wrong Times9-19

    Georgia Cotton: Decisions for Defoliation Timing9-19

    Cotton Harvest – Midsouth – Picking, Cotton Defoliation Gear Up – AgFax9-19

    Cleveland on Cotton: Market is Dog Paddling; China Offers a Bone9-19

    Doane Cotton Close: Bearish Chinese Sentiments Weigh on Futures9-19

    AFB Cotton Close: Dec. Violate Trendline Support9-19

    DTN Cotton Close: Gives Back Last Week’s Gains9-19

    Louisiana: Diagnosing Nematode Damage9-19

    Cotton Harvest – Southeast – Pickers Running – AgFax9-19

    Texas: Farm Bill Education Program Slated Oct. 1 at Frost9-19

    DTN Cotton Open: Falls in Brisk Early Dealings9-19

    California Cotton Defoliation – Gearing Up Early – AgFax9-19

    Keith Good: Soybean Futures Hit 4-Year Low; Wheat, Corn Tumble, Too9-19

    Doane Cotton Close: Traders Develop Jekyll and Hide Psychology9-18

    AFB Cotton Close: Dec. Posts Losses but Maintains Support9-18

    Tennessee: Cotton Yield Monitoring with the Case-IH and Deere Pickers9-18

    DTN Cotton Close: Slips to 8 Session Low9-18

    Most Farmers Willing to Take More Steps to Improve Water Quality, Says Study9-18

    U.S. Drought Outlook: Improvements in Texas, Southwest9-18

    DTN Cotton Open: Remains in Red after Sales Data9-18

    U.S. Energy: Shale-Focused Companies’ Financial Performance Improves9-18

    Gasoline Prices: Average Falls 5 Cents9-18

    Propane Stocks: Rise by 1.4M Barrels9-18

    Diesel Prices: Decrease by a Penny9-18

    Keith Good: USDA Approves Use of Dow’s New GMO Corn, Soybeans9-18

    California Cotton Defoliation: Dealing With Whitefly And Variability In 20149-17

    DTN Cotton Close: Ekes Out Marginal Dec. Gains9-17

    California: 42 Counties Designated Natural Disaster Areas9-17

    DTN Fertilizer Trends: Rabobank Forecasts Higher 3Q Retail Prices9-17

    Cotton in Southwest: Need More Heat; 4-Bale Dryland; Pigweed Plans – AgFax9-17

    DTN Cotton Open: Futures Inch Slightly Higher9-17

    Keith Good: 18.3B Bushels of Corn, Soybeans — Where to Put it All?9-17

    Doane Cotton Close: Renewed Selling on Overhead Resistance9-16

    AFB Cotton Close: Dec. Continues Lower9-16