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

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

Will cotton's champagne moment turn flat?

Twitter Linkedin eCard

If the last session felt like a champagne moment for cotton bulls, that is not just because futures soared 2.1%, March basis.

 

It is also because the gain was predictable to devotees of Bollinger, albeit in terms of the chart bands derived by analyst John Bollinger rather than the esteemed brand of bubbly.

 

“Three consecutive days of higher [cotton price] closes and the pinching Bollinger Bands portended a larger move was coming,” said Ron Lee at Georgia-based McCleskey Cotton.

 

“We obviously got that move” on Monday.

 

‘Air would be pretty clean’

 

What else can be drawn from the charts?

 

One observation is that October was “very close to being a doji month”, Mr Lee said - that is, ending the month at a price similar to where it began.

“That would indicate a significant low was reached.”

 

Certainly, that worked the last time we saw a decent doji month, in May, in the March contract, which preceded a 12% gain over June and July.

 

And what would really get bulls excited is a close above the 71.49 cents a pound reached when Hurricane Irma landed.

 

“The market could certainly grow some legs as the air would be pretty clean up there.”

 

‘Big and likely getting bigger’

 

Still, there is good reason for caution over expecting such a price mark to be achieved, with other market forces in play – notably the idea of a large US crop.

 

“Sources in and around Lubbock,” at the centre of Texas cotton-growing country, “indicate the crop out there is big and likely getting bigger,” Mr Lee said.

 

And at Rose Commodity Group, Louis Rose said that US Department of Agriculture data overnight, showing the US cotton harvest at 74% complete, ahead of the average pace and up 10 points week on week, “are not bullish figures”.

 

On-call calls

 

And another factor, which seemed in play in the last session, was down to interest from mills which had bought cotton “on-call”, ie at a price set against futures at a later date.

 

More than 15,600 lots, equivalent to some 1.6m bales of cotton, remained to be price fixed against the December lot as of last week.

 

The last session’s “move higher was likely spurred by the fixation and/or rolling of remaining mill on-call commitments against the soon-to-expire December contract”, Mr Rose said.

 

With first notice day on Friday, beginning the expiry process of the December lot, and Thanksgiving cutting off a day, it may be that the last session was something of a one-off hurrah.

 

Firm month

 

Still, cotton futures are on course to record a rise for a second successive November, in the face of the US harvest, and a big one at that.

 

Indeed, there are many who believe that, as in 2016, this will precede December weakness.

Twitter Linkedin eCard
Related Stories

Evening markets: Soybean futures gain, cotton prices jump on US data

Initial USDA forecasts for crop supply and demand for 2018-19 lift soy and cotton prices, but are not so well received in the cotton market

Cotton prices to tumble in 2018-19, despite surge in Chinese imports

The USDA, in its first extended full world cotton forecasts for 2018-19, also sees drought hurting US output. But US exports will hit a 13-year high

Demand for US soybeans, soymeal tumbles, as prices soar

US export sales of soymeal hit a 2017-18 low, and those of soybeans turn negative. But in cotton, buyers step in as prices fall

Evening markets: Argentine moisture slips up soymeal rally. But weather revives wheat

Meal futures dip, a little, for the first time in 12 sessions. But wheat futures gain, as drought spreads in Kansas, and cold reaches Europe
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069