Interviews
Cotton fundamentals continue to be bearish, O.A. Cleveland
29 Mar '08
4 min read
Spot market transactions have increased but growers continue to face a very weak basis. While the weak basis arrived with the highly volatile price activity during the first three weeks of March, it was the resulting liquidity crisis created in the cotton merchandising sector that led to the expanding basis. Additionally, the basis has been, and will continue to be weak due to the increasing level of carryover in the U.S. The new crop basis should narrow before such strength returns to the old crop contracts.
The sharp price correction of the past two weeks injected new life in the export market. However, do not expect anything more that average weekly sales unless the May slips to very near 70 cents. Weekly net export sales for the week ending March 20 totaled 451,800 RB, with Upland sales at 408.700 RB and Pima sales at 43,100 RB.
The primary of buyers of Upland were China (191,200); Turkey and Indonesia. The primary buyers of Pima were China (31,300); India and Japan. Export shipments continue as the drag with respect to projecting higher annual exports as only 218,400 RB were shipped. Upland shipments were 198,500 RB and Pima shipments were 19,900 RB. The primary destinations for Upland were China (48,500); Turkey and Indonesia. The primary destinations for Pima were China (9,300); India and Indonesia.
Monday morning will bring us the USDA March Planting Intentions Report. Look for grower intentions to be near the National Cotton Councils January estimate of 9.5 million acres. Intentions of 9.4 to 9.5 million acres will be slightly bearish while intentions of 9.3 million acres or less will be bullish. Growers should remain tuned to their local basis level. Old crop basis will be slow to improve, thus, market with price advances, not declines.
The sharp price correction of the past two weeks injected new life in the export market. However, do not expect anything more that average weekly sales unless the May slips to very near 70 cents. Weekly net export sales for the week ending March 20 totaled 451,800 RB, with Upland sales at 408.700 RB and Pima sales at 43,100 RB.
The primary of buyers of Upland were China (191,200); Turkey and Indonesia. The primary buyers of Pima were China (31,300); India and Japan. Export shipments continue as the drag with respect to projecting higher annual exports as only 218,400 RB were shipped. Upland shipments were 198,500 RB and Pima shipments were 19,900 RB. The primary destinations for Upland were China (48,500); Turkey and Indonesia. The primary destinations for Pima were China (9,300); India and Indonesia.
Monday morning will bring us the USDA March Planting Intentions Report. Look for grower intentions to be near the National Cotton Councils January estimate of 9.5 million acres. Intentions of 9.4 to 9.5 million acres will be slightly bearish while intentions of 9.3 million acres or less will be bullish. Growers should remain tuned to their local basis level. Old crop basis will be slow to improve, thus, market with price advances, not declines.
O. A. Cleveland
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