Cotton exports push prices, Dec futures inching towards 57 cents
22 Jul '06
3 min read
Cotton futures surged higher on the week boosted by limited trade buying, tandem trading with other commodities, positive demand and concerns surrounding crop problems in the U.S. and various other countries in the Northern Hemisphere.
Export sales and shipments also supported the price advance. The market is looking for a successful climb above 55.20 which could propel December futures upwards toward 57 cents.
However, a failure to reach 55.20, basis December, would likely speed a new retreat back to 52 cents. Yet, the market will slowly trend higher in tandem with deteriorating crop conditions in the U.S.
Net sales of upland cotton for the week ending July 13, totaled 142,200 bales with 62,200 bales purchased for shipment by July 31 and 80,000 bales for 2006-07 delivery. Weekly shipments were an impressive 440,000 bales, in line to push exports above the current USDA projection.
With just three weeks (shipping data) remaining in the 2005-06 marketing year, another one million bales could be easily shipped. In fact, since the Step 2 provision will expire July 31, the rush to load as much cotton as possible could push the final three week total to 1.2 million bales.
Drought conditions continue to spread eastward through the U.S. cotton belt. The cotton regions of New Mexico, Texas and Oklahoma are experiencing the most severe impact. However, Arkansas, Louisiana and the south delta of Mississippi are very dry. Central and southern Alabama are parched and the drought has extended itself through much of Georgia and into South Carolina. The dryland acreage in Southeast Georgia and most of the South Carolina, while not as severely stressed is near cutout.
marketing@alchempro.com
