Cotton prices eased off this week, but remain well grounded in their five cent, 62-67 cent trading range. The week was highlighted by funds and speculative traders rolling forward their long New York December futures positions to March. Such rolling will likely be the primary futures action for the next two weeks.
Coupled with record open interest, as well as a near historical imbalance in the on call report (call sales vs. call purchases), and the fast approaching first notice day for the December contract, the stage is set for very volatile trading in the coming three weeks.
Nevertheless, the five cent trading range will hold. In fact, I feel the market will be well supported at the 63 cent level. There appears to be far too much buying to allow the opportunity to squeeze out the last drop of lower prices.
U.S. export sales for the week ending October 25 showed a slight improvement as net sales totaled 216,300 RB. Sales of Upland were 198,100 RB with Pima sales at 18,200 RB. Turkey (48,400 RB); China and Mexico were the primary buyers of Upland. Pakistan (8,800 RB); Indonesia and Thailand were the primary buyers of Pima.
Export shipments totaled 184,000 RB with Upland totaling 177,700 RB and Pima at 6,300 RB. The primary destinations for Upland shipments were Turkey (41,800 RB): Mexico and China. Pakistan (2,300 RB); Italy and Indonesia were the primary destinations for Pima
Both export sales and shipments lag the level required to meet the USDA export estimate. However, it remains early in the marketing year and mills have been very reluctant to buy, hoping for a prices break below 62 cents, basis December futures. Albeit slight, U.S. export sales have picked up over the past three weeks-most notably with China again buying U.S. cotton.
marketing@alchempro.com
