Weekly cotton market review 12/21/2020.
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TECHNICAL ANALYSIS OF COTTON
Last week, ICE U.S. cotton futures closed higher at $77.16 cents per pound. Cotton prices ended up sharply last week returning to pre-pandemic levels and 2019 highs.
ICE U.S. cotton stocks were down to 78031 bales. Total cash transactions were 782746 bales this week compared to 630082 bales the previous week, an increase of 152664 bales this week compared to 98938 bales the previous week and 109251 bales at the same time last year. Demand has been good, with China, Korea and Vietnam showing interest.
Harvesting is complete in most areas, but continues further north in Oklahoma and Kansas.
According to the latest USDA report, the 2020/21 global cotton production forecast has been revised down to 113903K bales from 116112K previously. The decrease is due to the U.S. and Indian production. World cotton consumption estimates have been revised upwards to 115625K bales from 114050K previously. The 2020/21 market will therefore be in deficit, with a drop in stocks to 97520K instead of the 101435K initially forecast. The stocks according to the forecasts will therefore be down but historically high.
On the international level, the Republican leader of the senate Mitch McConnell announced Sunday evening that a 900 billion agreement would have been reached. The Fed said its purchases of securities would continue at the current pace of $120 billion per month until substantial additional progress has been made. The brexit saga continues, with the European Parliament's Sunday night deadline for a deal passed, but negotiations will continue. No one seems to want to take responsibility for a possible failure. After Pfizer, the FDA also approved Moderna's vaccine. As far as the pandemic is concerned, the vaccination campaign has started in the United States. The new strain of coronavirus detected in Great Britain worries, it would be 70% more contagious. The global death toll is rising, we have just passed 76 million cases worldwide, with more than 1.692 million deaths. The United States is still the most affected country, with 317,000 deaths and more than 17 million cases.
The Dollar fell last week, with the DXY closing lower at 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish.
WEATHER IN THE UNITED STATES
The hurricane season in the North Atlantic is officially over, and the U.S. cotton harvest is also coming to an end. Rainfall in October was above normal, but lower than normal in November. Last week's rainfall was normal.
ICE US CERTIFIED COTTON STOCKS
ICE cotton stocks at the height of the harvest season were down to 78031 bales from 86544 last week. Stocks are above the five-year average for the same period.
THE DOLLAR
The DXY index representing the Dollar against a basket of foreign currencies closed last week down to 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish. The possibilities of reaching an agreement on a contingency plan to support the U.S. economy, as well as the possibility of an economic recovery, are expected to continue.
Disappointing economic results weighed on the currency last week. Indeed, U.S. Retail Sales down to -0.9% and Unemployment Claims up to 885K disappointed.
A low dollar is generally favorable for dollar-denominated commodity markets.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The speculative net position on the cotton futures markets is up this week to 81.341 K instead of 67.96 K.
TECHNICAL ANALYSIS OF COTTON
Last week, ICE U.S. cotton futures closed higher at $77.16 cents per pound. Cotton prices ended up sharply last week returning to pre-pandemic levels and 2019 highs.
ICE U.S. cotton stocks were down to 78031 bales. Total cash transactions were 782746 bales this week compared to 630082 bales the previous week, an increase of 152664 bales this week compared to 98938 bales the previous week and 109251 bales at the same time last year. Demand has been good, with China, Korea and Vietnam showing interest.
Harvesting is complete in most areas, but continues further north in Oklahoma and Kansas.
According to the latest USDA report, the 2020/21 global cotton production forecast has been revised down to 113903K bales from 116112K previously. The decrease is due to the U.S. and Indian production. World cotton consumption estimates have been revised upwards to 115625K bales from 114050K previously. The 2020/21 market will therefore be in deficit, with a drop in stocks to 97520K instead of the 101435K initially forecast. The stocks according to the forecasts will therefore be down but historically high.
On the international level, the Republican leader of the senate Mitch McConnell announced Sunday evening that a 900 billion agreement would have been reached. The Fed said its purchases of securities would continue at the current pace of $120 billion per month until substantial additional progress has been made. The brexit saga continues, with the European Parliament's Sunday night deadline for a deal passed, but negotiations will continue. No one seems to want to take responsibility for a possible failure. After Pfizer, the FDA also approved Moderna's vaccine. As far as the pandemic is concerned, the vaccination campaign has started in the United States. The new strain of coronavirus detected in Great Britain worries, it would be 70% more contagious. The global death toll is rising, we have just passed 76 million cases worldwide, with more than 1.692 million deaths. The United States is still the most affected country, with 317,000 deaths and more than 17 million cases.
The Dollar fell last week, with the DXY closing lower at 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish.
WEATHER IN THE UNITED STATES
The hurricane season in the North Atlantic is officially over, and the U.S. cotton harvest is also coming to an end. Rainfall in October was above normal, but lower than normal in November. Last week's rainfall was normal.
ICE US CERTIFIED COTTON STOCKS
ICE cotton stocks at the height of the harvest season were down to 78031 bales from 86544 last week. Stocks are above the five-year average for the same period.
THE DOLLAR
The DXY index representing the Dollar against a basket of foreign currencies closed last week down to 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish. The possibilities of reaching an agreement on a contingency plan to support the U.S. economy, as well as the possibility of an economic recovery, are expected to continue.
Disappointing economic results weighed on the currency last week. Indeed, U.S. Retail Sales down to -0.9% and Unemployment Claims up to 885K disappointed.
A low dollar is generally favorable for dollar-denominated commodity markets.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The speculative net position on the cotton futures markets is up this week to 81.341 K instead of 67.96 K.
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