2014-06-25 / Farm & Ranch

Cotton Market Weekly

A Service Provided by Plains Cotton Cooperative Association June 19, 2014

The July/December spread remained the focus this week as the activity caused the December contract to drop to its lowest level since February before being able to make a turn around. Monday’s session at the Intercontinental Exchange (ICE) ended the day on both sides with July futures settling up 67 points at 87.65 cents per pound and December at 77.12 cents, down 63 points from the previous session.

The July/December spread expanded on Tuesday as July reached a new high as it peaked at 90.37 before settling 241 points up at 90.06. On the other hand, December traded at record lows dropping down to 76.10 cents before settling at 76.32, down 80 points. December continued to reflect a general bearish outlook following good crop conditions and frequent rains across parts of West Texas, according to an analyst.

Wednesday, December cotton broke the three-day negative trend as trading progressed to 77.37 before ending the day at 77.19 cents, up 87 points. July cotton remained strong as it closed up 109 points at 91.15. According to an analyst, as the First Notice Day for the July contract nears, trading could continue to be more unpredictable and vola- tile.

Thursday, after six days in positive territory, July lost ground as it settled down 39 points at 88.36 cents. The July/December spread narrowed as a result. December futures reached a high of 77.47 before ending the day at 77.13, down 6 points from the previous day. One analyst said, “We must give a nod to those traders who cared not a fig for on-call sales and export business, but who very correctly thought that July futures above the 90-cent mark were in very thin air, and had no business being there. In one day, the market lost almost half of what it had gained the previous week and a half.”

Wednesday night, storms moved through the Panhandle and brought good amounts of rainfall to counties in the Northern High Plains. The High Plains continues to show an improvement in the drought conditions. Meanwhile, the North Delta states are forecast to have showers and thunderstorms through the weekend, and late Sunday and Monday the Southeast cotton belt may see an increase in rain and storm activity. A majority of the Delta region continues to observe adequate to surplus soil moisture levels. This week, India is still experiencing below average rainfall for the month of June. The delay of the monsoon has continued to increase concern for late planting in central India.

For the week ended June 12, USDA reported export sales for upland cotton were up from the previous week and the prior 4-week average at 153,100 bales. The featured buyers were Indonesia, Vietnam and China. USDA also reported net sales of 103,300 bales for delivery in the 2014-15 marketing year. The top three buyers were Indonesia, Mexico and Vietnam. Export shipments were down 35 percent from the previous week and 37 percent from the 4-week average at 119,800 bales with the primary destinations being China, Turkey and Mexico.

The latest crop progress report showed 93 percent of the Texas crop had been planted. Texas, Oklahoma and Kansas were all above the fiveyear average. The U.S. crop is reported to be 95 percent planted, just below the five-year average of 96 percent. Thirty seven percent of the Texas cotton crop is reported to be in good to excellent condition while 44 percent is in fair condition.

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