Yet, relative to most other commodity price increases, cotton is still but an infant in diapers. Cotton's time is coming, but it will be the 2008 and 2009 crops that reap the significant price increases-and possibly the 2010 crop as well.
The 2007-08 marketing year will see considerable price volatility as the market is whipped around by speculative activity while fundamentalists attempt to bring order to the marketplace. The higher prices are coming, but it is still just a bit early. We need to fast forward to 2008, and most likely the late spring to early winter, before we can take advantage of higher cotton prices.
Export sales were better than expected with futures at 62-65 cents; however net sales remained a bit low due to prices being higher than most mills were willing to pay. Yet, some purchases were necessary to meet short term needs.
Net sales of cotton for export for the week ending 9/13/07 were 198,900 RB and comprised of 177,900 RB of Upland and 21,000 RB of Pima. The primary buyers of Upland were China (55,700 RB), Indonesia and Turkey.
Japan (7,700 RB); China and India were the primary buyers of Pima. Export shipments surpassed net sales and were 257,100 RB. Shipments of Upland were 247,900 RB and 9,200 RB of Pima. The primary destinations of Upland were China (84,500 RB) and Turkey and Mexico. Japan (3,000 RB) and India were the primary destinations of Pima.
Cotton growers should not panic if prices dip to the low 60's or even the high 50's. The peak harvest should bring seasonably lower prices. Yet, the price strength of the outside markets will keep a floor under cotton.
Additionally, cotton must hold what little acreage it has left and can only do that via its market price. While the December 2007 contract has likely reached its contract high, the December 2008 contract has miles to go-higher.
marketing@alchempro.com
