Market “Back in the Doldrums” – AgFax
Cotton is back in the Democrats when you call 120-140 cents a depression, a boring quiet market that has no reason to fall but continues to hint at rising prices. The market is trying to move from the 2021-22 marketing year to the 2022-23 marketing year.
After the July contract ends the Day of the First Notice, June 24, the new harvest of 2022-23 begins, and the old harvest falls into history textbooks. July is now the main contract.
The next nine weeks of trading will cover the struggle of speculators with textile factories. Mills, for all practical purposes, will go hat in hand in front of speculators, asking them to release them from trade factories set up by themselves. In the recent past, after such a riot, the heads of Chinese factories were arrested, and the press reported that they were executed.
The coming weeks should be explosive as factories fix prices against on-demand sales. Also the situation with humidity, or lack of moisture, continues to dominate in headlines in West Texas, the Rolling Plains of Texas and Oklahoma, as well as in cotton-producing areas in New Mexico and Kansas. The strongest drought of all time continues.
The U.S. National Weather Service has released a forecast showing the spread of the drought. In addition, the service believes that even local showers will be so limited that they will be virtually useless for cotton production – words and phrases that have never been used before.
However, this is not a weekend of Remembrance Day; thus, there is still time for useful moisture to settle to an area that accounts for about 45 percent of U.S. cotton production. July could rise to 150 cents.
Mother Nature controls the new December futures contract for the harvest, and prices are almost entirely focused on the humidity situation in the southwestern United States. December futures could rise up to 150 cents between today and August.
Over the past seven months, however high on-call sales have been, they have risen to new heights this week as the ratio of on-call sales to on-call purchases has jumped from around 9.1 to 15.1 under the July contract. (May is everything except memory, but, including May and July, the ratio is 16.1 to 1.)
This provides statistical evidence that the plants have postponed price fixations all year and will now pay dearly for cotton. Data tells us that last week alone, plants even added 433,900 bales to their on-call portfolios, despite prices hovering around 140 cents. The ratio is at an all-time high and promises that July futures will be very volatile.
Evidence suggests that plants should buy futures contracts equivalent to 6,311,100 bales from now until June 24. Conversely, the known sale of futures for the same period is only 420,300 bales. We have limited trading days ahead of us. Combined with this drought, which is facing new crop contracts, and it can be seen that the cotton trade will continue to attract more speculative funds in May and June, probably longer.
It should be noted that some believe that the duty report should not be used and misleading. Let me say, do not mislead those who say so. They just lack the historical perspective of the report and / or do nothing trying to hide the data.
They want to mislead others and oppose market transparency. I’ll also notice that it’s unusual to try to hide data or data on the couch behind a mask. Manufacturers warn against taking into account any organization that tries to drown out the data. If those who try to hide the data are not intimidated, they will not attack their use.
Rising prices above 140 cents virtually stopped the sale of cotton. Net exports for the week were at least 50,500 Upland bales for the marketing year. Cancellations included 13,500 bales from India and 9,600 bales from Turkey, among others.
Shipments totaled 367,100 Upland bales, this is not enough to reach USDA’s projected exports of 14.75 million Upland and Pima bales. Exports could fall to just 14.5 million bales, pushing the carryover to 3.8-3.9 million bales by the end of the year.
Cotton is not trading, but factories have to trade out of fiasco, they are trading past commitments and promises, the forecast is worth 150 cents.
https://agfax.com/2022/04/23/cleveland-on-cotton-market-back-in-the-doldrums/ Market “Back in the Doldrums” – AgFax