Cotton demand on the wane from China as futures market moves
30 Oct '06
3 min read
Recent weekly sales for the past month have been only half to two thirds the desired level. Export sales of upland cotton for the week ending 10/19/06 were 195,900 bales.
While the primary buyers were in the market, the actual sales to China, Turkey and Mexico were relatively small. Sales to date are well below the level necessary to meet expectations.
Compounding this problem is the realization that sales to China will likely be delayed until the beginning of 2007. This becomes more evident in that the recent trading level below 50 cents has not ignited any business.
Thus, if the market cannot generate any export business near the 50 cent level, doubtless it will not generate any real sales at 51 or 52 cents.
This is not to suggest that a quick price rally to and above 51 cent is not possible. Actually, it could be very likely.
However, should futures climb to the loan level then the market will likely uncover a large volume of new crop hedging. Yet, any such rally will be short lived. The market will continue to struggle for the next three to four months.
marketing@alchempro.com
