The export report for the week ending July 20 showed that net sales totaled 43,200 bales. Export shipments climbed to 463,400 bales. With two weeks of shipping data to be tabulated, 2005-06 U.S. exports now total 16.05 million running bales. The final tally should be between 17.0 and 17.1 million 480-pound bales. As stated in prior weeks, with the Step 2 program coming to an end on July 31, there is considerable pressure to get cotton on ships-or across the border, by that date.
Weather concerns, primarily in Texas, but also significant in major portions of both the Midsouth and Southeast, have likely lowered the U.S. crop to within the range of 19.3 to 20.3 million bales.
Thus, New York is fast becoming a weather market. The cotton trade's insistence of using the futures market as a cash market-dumping ground for low quality cotton will keep a lid on any attempt at a significant rally for another month. However, assuming weather problems continue to exist, then the late August time period will be ripe for a price rally.
Our July 1-July 15 pricing rule suggests growers should forgo pricing any cotton. Harvest and immediate post harvest prices could be the marketing year high, as is typical for a weather reduced crop. However, in today's world of global trade, prices could continue to rise throughout calendar year 2007 as the market takes note of a probably supply shortage in 2007-08.
marketing@alchempro.com
