2008 cotton plantings may fall to 9.5-9.7mn acre range
15 Dec '07
4 min read
Cotton prices, basis New York futures traded to 83 cents this week offering just a glimpse and a tease of what is coming. For some time we have commented about the long term bullish factors that were underlying the cotton market. While it was the 2009 crop futures prices that saw prices move well above 80 cents, the bull is just beginning to "fatten up."
The old crop March contract moved above 65.50 cents. The 62-67 cent trading range remains intact and likely will through most of the life of the March contract. Yet, without any doubt the long term trend is higher. As is always the case in pricing, timing is the key.
Will the old crop 2007-08 contract months (March, May and July 2008) sprint higher or must we wait for the new crop 2008-09 contracts (October & December 2008 and March, May, July 2009 rocket higher)?
In classic flip flop fashion that befits either national political party, I joined the fray this week proclaiming that the typical planting season (Spring 2008) rally was not on the horizon. Now before the week is done I eat crow, now fully expecting the typical spring rally will occur. My initial thoughts were that 2008 U.S cotton plantings would fall to the 9.5-9.7 million acre range.
However, one recognized forecasting unit has now estimated 2008 acreage falling to 9.2 million acres, a drop of 1.6 million below 2007 plantings. Yet, I still believe that the market cannot rise fast enough to buy additional planted acres for cotton. The grain and oilseed alternatives simply appear far too lucrative to keep cotton plantings from falling to at least 9.5 million acres and possibly lower.
marketing@alchempro.com
