RSS
Twitter
Linked In
News In
News
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Cotton prices hit 5-month high as China fears wane

Twitter Linkedin

Cotton prices hit their highest in nearly five months, amid concerns over US inventories, and growing confidence that China - for now – will avoid dumping its huge stocks onto the market.

Cotton for March touched 86.67 cents a pound in New York, the highest for a spot contract since August, before easing back to stand at 86.27 cents a pound in midday trading, a gain of 1.5%.

The rise was helped by a recovery in US export sales from a Christmas lull, reaching a four-week high of 223,735 tonnes for 2013-14 crop in the first week of January.

"Sales were up noticeably from the previous week and 46% from the prior four-week average," the US Department of Agriculture said.

However, waning concerns over releases from China's huge inventories, accounting for nearly half the world total, and doubts over US supplies added to buyers' confidence.

'We have this bomb'

While China had the potential to sink prices by releasing some of its huge stocks, "it looks like the market believes that China is not going to let much cotton go, and when it does, it may be of low quality," said Keith Brown, at US-based cotton broker Keith Brown & Co.

"It is like China saying that 'we have this bomb to drop, but we are not going to drop it'," Mr Brown said, if adding that the market would not, for ever, avoid a reckoning with the huge inventories, equivalent to more than one year's worth of Chinese consumption.

He also flagged expectations that the US Department of Agriculture will, in its February Wasde crop report, cut the forecast for domestic cotton stocks from the current estimate of 3m bales.

"Talking through the country, no one seems to know where this 3m bales is residing," he told Agrimoney.com.

Sell signal

However, Mr Brown forecasts limits to cotton's price rally, with a price of 88-89 cents a pound likely to bring more supplies "out of the woodwork", from countries such as India.

Traders wishing to judge the judge when to quit the rally may be wise to look at data on open interest, the number of cotton futures contracts running.

"The last three big rallies in cotton peaked when open interest was spiking," he said.

By Agrimoney.com

Twitter Linkedin
Related Stories

Will the correct Argentine weather outlook please stand up

There appears a lack of consensus on what lies in store for the country, just as worries are growing of an imminent La Nina

Evening markets: robusta coffee misses out on pre-holiday cheer

Many markets strengthen into Thanksgiving, including sugar and soybeans, helped by a stronger real. Will volatility reign after the holiday?

Corn and lean hogs top agricultural commodity bets for 2018, says Rabobank

... while palm oil is the worst, and live cattle price prospects not much better. What of wheat, soybeans and La Nina?

Morning markets: Soybean futures attempt revival of seasonal gains

... helped by buoyancy in the soyoil market, which spreads to palm oil too. In grains, short-covering slows for now
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069