Led by new crop, that is the December 2013 contract, all futures contracts either moved higher or held near unchanged during the New Year’s first week of trading. Concerns over both the Indian and Pakistani crops were also noted as we have long held that stocks in those countries were overestimated. While March continued to hold the 74-76 cent price level with ease, the new crop December contract moved near 80 cents, buying planted acreage all the way. The rally in new crop, brought on by fears of ever declining 2013 planted area, rallied to a high of 79.66 before the stabilizing above 79 cents. It is too early to run much higher, but be on the lookout for advancement into the low 80’s.

Over the holidays others bought in to our argument that the mass of Chinese carryover stocks will be held off the market. Nevertheless, those stocks will be released only to the tune of immediate domestic Chinese mill requirements. Imports will not be banned, but imported cotton brought into the country outside the quota will continue to be subject to 40 percent import tax. Even at that, U.S. cotton will remain very competitive in the 74-76 cent range, basis the New York nearby contract.

Export sales were strong given that the Chinese were on holiday last week as total net sales climbed above 200,000 bales. Net Upland sales, while below recent weeks, were still 180,600 RB with another 17,200 RB of Pima, both for 2012-13 shipment.

Sales of 3,200 RB of Upland were made for the 2013-14 marketing year. Export shipments remand on schedule as 57 percent of the USDA forecast has been shipped to date, compared to the five year average of 58 percent. U.S. and Chinese economic data continue to suggest that consumer spending is growing and that consumers feel more confident. This should bode well for demand throughout the year. However, the inability of the U.S. Congress to cooperate looms on the horizon and will keep the consumer a bit on edge and could prove very troubling to demand.

The Beltwide Cotton Conferences are scheduled for this Monday through Thursday at San Antonio and the atmosphere should prove very positive for agriculture in general and cotton in particular.  Producers should look to begin pricing the 2013 crop on another approach of December to 80 cents. Look to price some 25 percent of expected production at that general level.

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