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    Cotton Marketing News

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    Brittany Etheridge
    - Cotton prices have struggled due to ongoing trade tensions and weakening global demand. December cotton futures are around 60 cents but need to stay above 61 cents to be considered improving. - The USDA has reduced its projections for global cotton use, US exports, and the size of the US cotton crop for the 2019 season. A smaller US crop may support prices but not provide enough of a boost without improved trade and demand. - Producers should protect against lower prices through options or putting cotton in the USDA loan program while hoping prices increase with a trade deal between the US and China.

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    © All Rights Reserved
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    Cotton Marketing News

    Uploaded by

    Brittany Etheridge
    67 views1 page
    - Cotton prices have struggled due to ongoing trade tensions and weakening global demand. December cotton futures are around 60 cents but need to stay above 61 cents to be considered improving. - The USDA has reduced its projections for global cotton use, US exports, and the size of the US cotton crop for the 2019 season. A smaller US crop may support prices but not provide enough of a boost without improved trade and demand. - Producers should protect against lower prices through options or putting cotton in the USDA loan program while hoping prices increase with a trade deal between the US and China.

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    Cm n 09282019

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    Cm n 09282019

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    - Cotton prices have struggled due to ongoing trade tensions and weakening global demand. December cotton futures are around 60 cents but need to stay above 61 cents to be considered improving. - The USDA has reduced its projections for global cotton use, US exports, and the size of the US cotton crop for the 2019 season. A smaller US crop may support prices but not provide enough of a boost without improved trade and demand. - Producers should protect against lower prices through options or putting cotton in the USDA loan program while hoping prices increase with a trade deal between the US and China.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    67 views1 page

    Cotton Marketing News

    Uploaded by

    Brittany Etheridge
    - Cotton prices have struggled due to ongoing trade tensions and weakening global demand. December cotton futures are around 60 cents but need to stay above 61 cents to be considered improving. - The USDA has reduced its projections for global cotton use, US exports, and the size of the US cotton crop for the 2019 season. A smaller US crop may support prices but not provide enough of a boost without improved trade and demand. - Producers should protect against lower prices through options or putting cotton in the USDA loan program while hoping prices increase with a trade deal between the US and China.

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    REPRESENTING COTTON GROWERS THROUGHOUT ALABAMA, FLORIDA, GEORGIA, NORTH CAROLINA, SOUTH CAROLINA, AND VIRGINIA

    COTTON MARKETING NEWS


    Volume 17, No. 15 September 27, 2019

    to be the barometer or measuring stick for this market. An


    Sponsored by eventual trade deal with China is important. Specifically, as far as
    we are concerned, a deal that is positive for the US cotton
    producer. But there are also other factors that are important.
    Cotton’s Struggles Continue
    1-A troublesome trend has developed. USDA’s September supply
    I have often been asked recently if cotton prices are going to get and demand estimates now project World cotton use for the 2019
    better. It’s a tough question and no one knows the answer. There crop marketing year to be 121.74 million bales—down 1.33 million
    are positive scenarios that would push price up but also, the bales from the August estimate and the 4th consecutive month
    market continues to be hammered by negative forces. that projected use/demand has been cut.

    For the producer, let’s think about (1) what would you consider 2-USDA’s September numbers reduced US exports for the 2019
    “better” and (2) what price would be good enough to entice you crop year by 700,000 bales. This could not have been unexpected.
    to sell an additional amount of 2019 production? The previous export number was too high anyway given the
    uncertain trade environment and the weakening demand picture.
    What is making this situation so frustrating is the whip-saw of daily
    and weekly ups and downs in this market. There is no direction 3-The US crop is shrinking and will likely get smaller. The overall
    and it seems the slightest bit of news, pro or con, whether truly crop condition has worsened during this month. The US crop is
    significant or not, seems to get a reaction. It’s like the market is now projected at 21.86 million bales—down 660,000 bales from
    so sensitive and so uncertain that it reacts to almost anything. the August estimate but still 3 ½ million bales above last year.
    December futures are currently in the neighborhood of 60 cents.
    Right now, 60 to 61 cents is the barometer for this market—over 4-The revision in exports pretty much matches the reduction in
    61 is considered getting “better” and moving in the right direction. the US crop. This may suggest that the reduction in exports was
    more due to less available supplies than weaker demand. That
    would be concerning because it could suggest that further
    downward revision in exports is possible.

    5-A recent report suggests that the India crop could be up 20% this
    year. This compares to an 11% increase based on USDA estimates.

    6-Export sales over the past 4 weeks have averaged 131,000 bales
    per week. This week’s report was relatively good at 170,500 bales
    but sales during September have been below the levels in August.

    A repeat of prices in the 57 to 58 cent area is possible if the trade


    war continues to drag out and if demand continues to weaken. A
    smaller US crop may provide some support (being able to hold
    SOURCE: DTN, 09/27/2019
    above 60 cents) but will not likely give prices the upward jolt we
    want without positive news on the trade and demand front also.

    After trading below 60 cents for a month and a half, Dec futures Producers need to protect against the advent of lower prices while
    broke out to over 62 cents on September 12 after President Trump hoping that prices move higher. Perhaps the best way to do this
    announced that a tariff increase by the US scheduled for October is to put the cotton in Loan where a MLG can offset a drop in price.
    1 would be delayed until October 15. This was after China Using Call Options is also a possibility but that cost you the
    announced it would exempt tariffs on some US imports. premium. Taking any LDP/POP and holding the crop will not
    protect you. Taking a “provisional” or deferred price contract will
    Both of these were positive signs in the long trade war and talks not protect you unless it also provides a minimum price.
    are scheduled to begin again in October. Cotton, and other
    markets, are clearly poised to move higher if and when significant Cotton Economist- Retired
    progress can be made on the US-China trade front. Since that Professor Emeritus of Cotton Economics
    time, however, prices (Dec futures) have again lost ground but still
    stand above 60 cents. For this week, December closed at near 61
    cents and up almost ½ cent for the week. Again, 60 to 61 seems

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