Thurs Cotton Futures

[wareagle]

I am going to post some of my thoughts about cotton price direction. With futures hovering around the 45c range, i see a lot of potential in the coming months. Our range is 28c to around 60c in the last year. It has been a topsy turvey market for some time now. However, everyone can breathe easier with the farm bill and a solid 40c futures market. This years crop is in the ground and it is getting mixed reviews depending on local. As we get closer to harvesting, weather will guide the crop and the prices. We all have to keep our eyes on china. China can control many things with their consumption and production potentials, most importantly the price.

Todays market jumped up about 160 points on december futures. This was contributed to in increase in domestic consumption for the month of about 800,000 bales to around 8.7mill. For tommorrow we have the weekly export sales report which has an early indication of being bearish in my opinion. Nevertheless, i expect the market to still follow through with todays gains and rise around 25pts. It is very important for me to say that the cotton market is very similar to gambling. If you don't study every angle, every day, every place in the world, you will not be profitable in the long term. I look forward to trying to help some people on the short term and sharing my thoughts .

 

[wareagle]

Well todays market reacted more to the export report than i had anticipated until the very end. We traded between 30 and 70 pts lower all day until the end of trading. The market closed down 12pts on dec and up 2 on mar. Very light volume with no fixations from farmers and light movement from the merchants. Towards the end of the day there was some short covering and an all in all good day holding on to Wed. gains as i said. I will continue to watch the dec mar spread which is 312 pts today. I see some oppurtunity to buy dec and sell mar, but it is still early with harvesting about to spread across the south.

 

[acehistr8]

Wareagle, thanks for the insight.

How have the futures markets in general reacted to the drought, if at all, and do you see opportunity here if forecasts see more rain in the longer term forecasts?

 

[wareagle]

Ace, good question, but it depends on what drought you are refering to. I presume the drought in the deep south(GA, and the carolinas). Over the last few days these spots have gotten some much needed rain for crops. The market could care less if there is a drought in the NE or NW because there is no cotton being grown there. In california, no rain doesn't matter because a large portion of that crop is irrigated along with south texas. Our south texas crop is almost 100% off the stalk. West texas has just started picking and ginning, after that the picking will spread east ending up in the carolinas in early Nov.

To answer your question about the longer term, yes weather has a lot to do with price. When the delta starts picking all of our cotton in about a month or so, the market will watch for rain. With the bolls open, rain is devastating to the crop. The cotton will fall off the plant, loose strength and color among other problems, hence driving the futures market higher due to damage in the delta. None of this has happened yet, but we are about 40-60% open in W.Tn, N. Miss, and East Ark, otherwise known as "memphis territory". I would be glad to answer any other questions.

 

[wareagle]

It has over a year since i posted anything about the cotton market. As i sit here this mother is trading up 2.73 pts in December only 27 pts away from the limit. This market is as strong as a garlic milkshake. With Dec trading around 7350 cents per lb this will almost certainly kill the domestic and european textile industry. WHY? CHINA, CHINA, and CHINA. They consume 30% of the world's cotton and this is only increasing. The markt is up almost 20 cents in 4 months. The only mkrt that is buying cotton is china and their domestic crop is shitty to say the least. Is this mrkt a buy? As long as china keeps buying yes! We could reach 85c buy the end of Decs contract. Here is the downside with the price so high this will drive world production up and consumption down to the levels we were two years ago when the market trading in the 30s and 40s. I could write for days on this but i will stop now. If anyone is interested let me know what i can do.