Saturday, December 14, 2013
cotton-picking-night-california-dferguson-12122013-feature

Cleveland On Cotton: Chinese Mills Know What They Want

AgFax.Com - Your Online Ag News Source


The December supply demand report and the weekly export sales report were both void of any surprises this week, but prices still moved higher. The March contract closed above 83 cents and is approaching the 84-85 cent mark suggested last week as a probable point where price resistance will be too stiff to penetrate.

This idea was supported by the export sales report as well as the technical factor, open interest. Certificated stocks still need to rise as they have now fallen below 60,000 bales with concerns that more decertification is coming.

Either way, that amount is not enough. So, the market must find a way to bring more to the Board. Hopefully, this week’s move above 83 cents will do that. Nevertheless, I continue to look for the current rally to exhaust itself near the current level.

 

Both world and U.S. supply-demand estimates were little changed from the November report. While totals remained much the same, some of the country by country estimates did change. Principally, the Chinese crop was lowered another 500,000 bales, down to 32 million bales, and in line with Chinese announcements. USDA did, as it somehow seems to do, increase world carryover a bit.

Weekly U.S. export sales slowed somewhat, ending a seven-week run of above 200,000 RB of weekly sales. The slowing was not unexpected as the reporting period corresponded with price activity near or above 79 cents in the March contract–after a period of 77-78 cent prices.

As stated, the price advance to 83 cents will likely continue to limit sales.  Still, net sales of Upland on the week were 174,100 RB and Pima sales were 3,300 RB. To date, total U.S. sales of all cotton have climbed to 7.03 million bales.

Chinese mills continue to shy away from sales from the national reserve, with the exception of good quality cotton from Xinjiang and government-owned imported cotton. That is, the quality crisis continues and, as of yet, has not come home to roost.

The limited availability of good quality in the Chinese reserve continues to strain textile mills by limiting the volume of quality yarns they can produce. Thus, the upstream mills continue to purchase imported yarn from around the world, including the U.S. at month-on-month and year- on-year record levels.

Imported cotton yarn does not carry the stiff penalty that is associated with imported raw cotton. So, world demand remains strong, despite the lower level of yarn production coming from China.

This quality problem will linger and keep a floor under prices. Nevertheless, at least a measurable proportion of the current rally has been associated with short covering by funds and not with any increase in open interest.

This is another reason to suggest that the 84-85 cent level in the old crop March is top heavy. You may want to consider purchasing puts to cover a portion of new crop production, but that discussion will wait for another time.

Tags: , ,


Leave a Reply

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

Sunbelt Ag News

    U.S. Rice: Planting Decisions Stalled; Alternative Crops Considered1-30

    AgFax Cotton Review: Harvest a Mixed Bag for Texas Growers; India Sells Off Stockpiles1-30

    Rice Market World: Prices Low – But More Positives Than Negatvies1-30

    AgFax Grain Review: Neonics Use Critical; Soybean Prices to Drop, Corn May Rally1-30

    Peanuts: Bankrupt Texoma Sells Mississippi Buy, Dry Facility1-30

    Florida Peanuts: Done Right, Rotation Adds Thousands Of Pounds1-30

    Grain TV: Soybean Year-to-Date Exports Lower than 20141-30

    Cleveland on Cotton: World Consumption Increases; Will U.S. Sell Out?1-30

    Rose on Cotton: Demand is Hot; Anticipate a Pre-Plant Rally1-30

    Biofuel Industry Threatened with Shutdown – DTN1-30

    DTN Livestock Close: Positive Day for Cattle1-30

    Welch on Wheat: Texas Conditions Decline, Still Above Average1-30

    Doane Cotton Close: Strong Exports Don’t Provide Strong Support1-30

    AFB Grain-Soybean Close: General Weakness Continues1-30

    AFB Cotton Close: Narrow Trade Ends Lower1-30

    AFB Rice Close: Hard Sell Off1-30

    Harvard Farm Boy to Show Fellow Students Real Farmers – DTN1-30

    Welch on Grain: Corn, Sorghum Continue to See Strong Exports1-30

    DTN Cotton Close: Tight Trade Ends at Midrange1-30

    2015 Is International Year of the Soils – Video1-30

    Catfish Production Acres Declined 10%1-30

    USDA: Peanut Price Highlights1-30

    DTN Grain Close: Late Corn Rally1-30

    Weekly Cotton Market Review1-30

    DTN Livestock Midday: Cattle Futures Bounce Higher1-30

    DTN Grain Midday: Corn, Soybeans Lead Drop1-30

    Farm Management: 3 Reasons to Praise A Job Well Done – DTN1-30

    Farming: Leaner Profits Drive Farm Loans – Not Equipment Purchases1-30

    Ethanol Remains Competitive as Gasoline Blend Despite Price1-30

    DTN Cotton Open: Futures Start off Lower1-30

    DTN Livestock Open: Aggressive Pressure to Continue1-30

    Bt Corn Hybrid Manufacturers May Face New EPA Rules1-30

    DTN Grain Open: Trade Begins Quietly Higher1-30

    Georgia Cotton: Glyphosate-Resistant Pigweed Fight Requires Vigilance1-30

    Keith Good: $4.8 Billion Hit to Farm Program Possible Over 10 Years1-30

    Mississippi River Locks – ‘Held Together with Baling Wire and Duct Tape’ – DTN1-29

    Senate Passes Keystone Bill, Unable to Get Supermajority – DTN1-29

    ELS Cotton Competitive Payment Rate Is Zero1-29

    California: New Robotic Weeder to Save Time, Money1-29

    Peanut Stocks: Utilization Up 6% from Last Year1-29

    U.S. Grain Transportation: Corn Inspections Highest Since October1-29

    North Carolina: Cotton Variety Performance Data Available1-29

    Texas Pecans: Trade Slow as Harvest Winds Down1-29

    Western Region Pecans: Light Deliveries, Harvest Nearly Done1-29

    U.S. Energy: Market Balances Seen in Changing Futures Price Spreads1-29

    Gasoline Prices: Average Declines Again1-29

    Propane Stocks: Down 1.9M Barrels1-29

    Diesel Prices: Average Drops 7 Cents1-29

    North Carolina: Feb. 4 Meeting Looks At Crop Mix, Marketing Decisions For 20151-28

    Biodiesel: Policy Incentives Necessary for Profitability1-28

    AgFax Peanut Review: Peanut Protein Cure for Nut Allergy?1-28

    DTN Fertilizer Trends: Fewer Pre-Purchases Than Normal1-28

    Ag Lenders’ Sentiment – Latest National Survey From K-State – (Audio)1-28

    Drones – The Next Big Tool in Agriculture1-28

    AgFax Rice Review: Govt. Action Requested Over Iraq Trade; Japan May Increase U.S. Imports1-28

    Seramas: Little Chickens With Great Personality1-28

    Ag Fuel Costs Likely to Dip, Chemicals to Rise in 2015 — DTN1-28

    Seed Companies Expected to Hold Line on Price Increases — DTN1-28

    Soybeans: Higher Protein Levels Mean Better Quality, Better Prices – DTN1-27

    Crop Insurance: Most Corn Farmers Opting for PLC – DTN1-27

    Soybean Rust Turns Up In Louisiana On Kudzu1-27

    Florida: AgSave Summit Meetings, Feb. 231-27

    Crop Insurance: Difference in Expected Program Payments1-27

    Wild Hogs: North Carolina Hunter Scores Record Kill1-27

    Soybeans: East Coast Winter Weather Is No Match for Biodiesel1-27

    Cotton: Industry Recognizes Utah Researcher For Cotton Genome Efforts1-27

    Corn and Soybean Market: Consumption is the Story1-27

    Sunbelt Ag Events

     

    About Us

    AgFax.Com covers agricultural trends and production topics, with an emphasis on news about cotton, rice, peanuts, corn, soybeans, wheat and tree crops, including almonds, pecans, walnuts and pistachios.

      

    This site also serves as the on-line presence of electronic crop and pest reports published by AgFax Media LLC (formerly Looking South Communications).

        

    Click here to subscribe to our free reports.

      

    We provide early warnings and confirmations about pests, diseases and other factors that influence yield. Our goal is to quickly provide farmers and crop advisors with information needed to make better and more profitable decisions.

         

    Our free weekly crop and pest advisories include:

    • AgFax Midsouth Cotton, covering cotton production and news in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and Missouri.

    • AgFax Southeast Cotton, covering cotton production and news in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia.

    • AgFax Southwest Cotton (new for 2013!), covering cotton production and news in Texas, Oklahoma, Kansas and New Mexico.

    • AgFax West (formerly MiteFax: SJV Cotton), covering California cotton, alfalfa, tomatoes and other non-permanent crops in California's Central Valley.

    • AgFax Rice covering rice production and news in Arkansas, Louisiana, Mississippi, Missouri and Texas.

    • AgFax Peanuts, covering peanut production in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia.

    • AgFax Southern Grain: covering soybeans, corn, milo and small grains in Southern states.

    • AgFax Almonds, covering almonds, pistachios, walnuts and other tree crops in California's Central Valley.

    • AgCom 101, providing guidance to ag professionals involved in social media.

    Our newsletters are sponsored by the following companies: FMC Corporation Chemtura Dow AgroSciences.

          

    Mission statement:

    Make it as easy as possible for our community of readers to find and/or receive needed information.

              

    Contact Information:

    AgFax Media. LLC

    142 Westlake Drive Brandon, MS 39047

    601-992-9488 Office 601-992-3503 Fax

    Owen Taylor Debra L. Ferguson Laurie Courtney

          

    Circulation Questions?

    Contact Laurie Courtney