Unbelievable. It is almost time for Christmas shopping. Be sure to give a gift of cotton.
The market did back and fill all week as it likely will until USDA’s November supply demand report provides more clarity with respect to market fundamentals. Yet, before the market can get to USDA’s November report, it must first decipher the upcoming October supply demand report. We are likely seeing larger crops in China and India, but smaller harvests in the U.S. and Africa.
U.S. export business continues to lag, and the world textile industry is some 20 to 30% shuttered. Thus, world cotton demand remains under considerable price pressure. World cotton supplies add to the negative price pressure on cotton as world carryover, come November, will still be at least 100 million bales.
Look at it this way. Come November – just a month away – world cotton carryover will be large enough to completely supply the world’s textile needs for 2020…and that’s even before harvest of the 2020 crop even begins. In other words, there is a big bunch of cotton out there chasing a market [granted, much of the oversupply is low quality and/or SLM 1-1/16 inch (grade 41-4-34) and below.] Thus, the market – as measured by New York ICE, basis December futures – will find great difficulty reaching above 67.50-68 cents in the coming months.
The marginally lower prices experienced two weeks ago were reflected in the weekly export report for the week ending Sept. 24, as net sales of upland cotton were good at 233,800 running bales. The principal markets were Turkey, China, Vietnam, Mexico and Indonesia, and these five countries accounted for 69% of the weekly sales. Cancellations were very minor at only 4.3 million bales.
Shipments totaled just 218,200 running bales, with the major destinations being China, Vietnam and Indonesia. Shipments to China – 105,400 running bales – represented 48% of the total shipments. It is believed that sales of at least 200,000 bales already made to China have not been registered.
Notwithstanding excellent sales to China on the year, accumulated cotton export sales/commitments are 8 million running bales (about 8.35 million bales) through the first 8 weeks of the 2020-21 marketing year. That is down about 7% year on year. Last season’s exports were 15.53 million bales.
The current USDA projection for this season is 14.6 million bales. The current pace of shipments this year projects that actual exports will fall to some 14.4 million bales, or some 200,000 bales below the current USDA estimate. Yet, given that U.S. cotton is not price competitive in the world market and coupled with the lack of supplies of U.S. high grades, U.S. exports could fall to only 14.3 million bales. However, it is not expected that U.S. carryover would increase, as many feel the U.S. crop will be some 300,000 bales smaller than the current USDA estimate of 17.1 million bales.
The monthly Ag Market Network Teleconference changes to a new time this month and will be broadcast live on Friday, Oct. 9 at 1:30 PM Central. The group will host a roundtable cotton marketing discussion to include trade issues, marketing suggestions, price forecast and quality cotton issues. You will also have an opportunity to ask questions. To listen and ask questions, dial 605-313-5148 and enter the code 571052. You can also listen to a rebroadcast later at the Ag Market Network website.
Give a gift of cotton today.
Πηγή: Cotton Grower