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Cotton prices follow oilseed markets
16
Feb '08
Tell me the direction of the oilseed/grains markets and I can rather accurately predict the cotton market. The story line continues the cotton market is having great difficulty following its own fundamentals, following instead the grain and oilseed complex.

While the New York market is focusing, to some degree on 2009 planted acreage, the fact that increasing carryover stocks in the world's major exporting countries has failed to hold prices down but only for brief periods.

Cotton fundamentals attempt to pull the legs out from under the 70 cent level, only to find that concerns over grain and oilseed supplies push cotton prices back up. We have, on many occasions, cautioned you about how volatile the market has become. Too, there in nothing on the horizon that offers any let up in that situation.

At the week's risk management seminar sponsored by Cotton Incorporated, I cautioned growers not only about the continued bullish price environment created by the ethanol situation, but also the growing potential global vegetable oil crisis. I had first made that observation at the Certified FiberMax Quality Seminar for Chinese textile mills in October 2007.

The New York December was the spot futures month at the time and I offered that 63 cents, basis December, would be low mark for the remainder of the contract, and it was. The next suggestion was that the March contract would not see anything below 67 cent-we now know it did go to 66 cents. I am now of the opinion that 69 cents will be the low in May once it becomes the spot trading month is just a few days.


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