New York cotton futures continue to fight off efforts to push the market lower, but fundamental news continues to surface in support of preventing lower prices. Nevertheless, the market must face the harvest pressure of the Northern Hemisphere crop for another three to four weeks.. On call sales continue to be far ahead of on call purchases.
China, after a near six week absence, is back in the market looking for U.S. cotton. The Chinese and Pakistan crops are slipping a bit. The U.S. dollar continues to slide making U.S. cotton cheaper and cheaper to the world. Indications are that the U.S. is guaranteed to lose more cotton acreage to grain and oilseeds in the coming season. Open interest volume seemingly establishes a new record each day. These factors point to higher cotton prices.
Nevertheless the harvest pressure must be surmounted and the open interest, while supporting the market, does suggest that the prices could be very volatile in the coming month to six weeks. Additionally, the ever growing Indian crop has found a home in China as Indian cotton is one of the lowest priced growths.
Certificated stocks fell for the first time in weeks as some 65,000 bales were decertificated; being sold in the export market. However, we will likely see these stocks rise again as another near 32,000 bales are awaiting review. However, the stocks will ease lower during the 2008 calendar year.
The exports sales report demonstrated that mills have increased the price they are willing to pay as net export sales for the week ending October 18 , totaled 202,800 RB, with Upland totaling 196,700 RB and Pima at 6,100 RB.
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