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Cotton Marketing News

The cotton market has leveled off in recent weeks after peaking in late February. Prices have declined over the past couple of weeks but this does not necessarily indicate cause for alarm. Key factors that will influence future price movement include world cotton use numbers, US export reports, upcoming USDA acreage estimates, weather conditions, and shifts in global supply and demand. While a return to 90-cent cotton is less likely now, stronger demand signals or supply concerns could still push prices higher later in the season if other factors hold steady.

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Morgan Ingram
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56 views

Cotton Marketing News

The cotton market has leveled off in recent weeks after peaking in late February. Prices have declined over the past couple of weeks but this does not necessarily indicate cause for alarm. Key factors that will influence future price movement include world cotton use numbers, US export reports, upcoming USDA acreage estimates, weather conditions, and shifts in global supply and demand. While a return to 90-cent cotton is less likely now, stronger demand signals or supply concerns could still push prices higher later in the season if other factors hold steady.

Uploaded by

Morgan Ingram
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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REPRESENTING COTTON GROWERS THROUGHOUT ALABAMA, FLORIDA, GEORGIA, NORTH CAROLINA, SOUTH CAROLINA, AND VIRGINIA

COTTON MARKETING NEWS


Volume 19, No. 6 March 15, 2021

The key price indicator is World Use. The price run we’ve
Sponsored by experienced is due largely to optimism and improved outlook for
cotton demand. The monthly Use number needs to support that.

Weekly export numbers are also key as this helps confirm the
Have Prices Leveled Out?
short-term direction of the market. Last week’s export report (for
the week ending March 4th) showed net sales of 231,200 bales—
It’s been a different tone to the market the past couple of weeks.
up 27% from the prior week but still low compared to the average
Have we seen the pre-plant peak? Has the trajectory changed?
over the past 4-6 weeks. Top sales destinations were Vietnam and
China. Shipments were 386,600 bales—a good number but down
New crop December futures peaked at 87.66 cents back on
3% from the prior week. Top destinations were China, Vietnam,
February 24 and then marked another near-peak close at 86.79 on
and Pakistan.
March 1. Since the peak close on Feb 24, prices have trended
down—closing down 7 of the 12 trading days since and is looking
lower again today after closing at 84.2 cents last Friday.

I do not necessarily see this as reason for alarm. But it is clear that Despite the optimism in demand and numbers to support that
the market felt a need for adjustment. The run to 90-cent cotton optimism, the market is already proving to be sensitive to US
is not dead but it’s been wounded. Hopefully, most/many acres, weather, and other US and World factors on the supply side.
growers took advantage of that earlier run. If so, you should feel
comforted by that and hopefully you’ll get additional chances at In other words, even stronger demand and/or supply shocks may
near those levels or higher. be necessary to give another run at 90 cents. Another way to look
at it—if demand signals continue strong and if there are supply
We have a long way to go—haven’t even planted the crop yet. concerns here or elsewhere, prices could yet make a run higher.
There are plenty of unknowns and time yet to recover. Prices (Dec
futures) have support at 80 to 82 cents. Void of any major news The USDA early estimate is 12 million acres planted. The official
good or bad, new crop should be comfortable at 83 to 86 cents. Prospective Plantings number will be out on March 31. Most
analyst projections I’ve seen say 12.0 to 12.5 million acres. There
Highlights from last week’s USDA monthly supply and demand is room for a somewhat larger US crop because beginning stocks
estimates include: will be down and demand is improved. The question remains—at
 The US 2020 crop was lowered 250,000 bales. what US production does it begin to hamper price?
 US 2020 crop ending stocks were lowered 100,000 bales.
 In a bit of a surprise, US 2020 crop exports were left unchanged.
 World production was lowered roughly 800,000 bales and Use Cotton Economist-Retired
was increased 250,000 bales. Professor Emeritus of Cotton Economics
 Use was increased for Turkey, Pakistan, Vietnam, and
Bangladesh. China was unchanged from the February estimate.

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