- MARKET OVERVIEW
December option expired last Friday, making activity interesting as traders adjusted positions before closing.
First Notice Day is Wednesday through November 23, meaning most attention has turned to the March futures contract.
Weak U.S. cotton export data for the week was largely a cause of “price drops,” and the dollar’s rebound from mid-week after falling to a three-month low encouraged selling and liquidation.
The March futures contract closed at 83.78, down 150 points. Open interest aggregated lower, losing 34,720 contracts to end the week at 196.112.
- WEATHER – CROP
Pakistan: This crop is forecast to decrease by about 34% compared to the previous crop due to flood effects.
Australia: crop is forecast at around 7 million bales, and exports are expected to reach about A$7 billion ($4.7 billion) in the 2022-23 crop year, making cotton the most valuable agricultural export commodity country most valuable after wheat and beef. About 30% of the new crop in 2023 has now been sold by cover month future and total exports are sure to continue to grow in the coming months.
Brazil: The market is now beginning to scrutinise the production potential in Brazil as a competitor for US cotton for export. Brazilian Cotton Conference to be held in Hanoi on November 22 and Ho Chi Minh on November 25 will provide a wealth of 2023 production data.
Bangladesh: is expected to increase cotton production by 500% by 2030 as the country’s cotton consumption continues to grow.
West Texas – USA: affected by the largest earthquake on record on Wednesday, November 16, 5.3 magnitudes, struck at 3:34 pm local time near Mentone, Texas, shaking parts of the US Permian oil-producing region.
- SALES – EXPORT USDA
Compared to the previous week, export sales were dismal for the week ending Nov. 10.
Upland sales for crop 22/23: reached 25,100 bales, the lowest recorded in the marketing year. Recent price activity and worries about low demand have a lot to do with weaker than average sales.
Upland exports: was the only positive aspect of the report, with a total of 183,000 bales exported during the week. The three largest delivery points are China (88,800 bales), Pakistan (27,300 bales), Mexico (24,400 bales).
Pima sales: also slower with 300 very small bales pre-ordered for the current season and only 800 shipped.
- MARKET COMMENTS
Demand concerns and external market data continue to weigh on cotton prices. Traders will keep an eye on macroeconomic data and the usual weekly reports to see where cotton prices might move.
Mills commitments for all months of operation fell by more than 100,000 bales in the week ending 11/11. Producers commitment is little changed at about 3.7 million. Therefore, mills continued on-call fixation on demand has supported the market price towards 90.00 cents.
With Thanksgiving next week, many reports will be delayed.
Graph trend forecast for Cotton Futures (March): below market at 74.08 – 74.20 and above market at 91.18 – 91.42
Wishing you a happy weekend!
Thank you for your interest in the information.