Interviews
December contract is preparing to regain some steam
07 Jun '08
4 min read
Bangladesh (800 RB); Hong Kong and India were the primary buyers of Pima. Export shipments lag substantially off the pace necessary to meet USDA's export estimate of 14.2 million bales, an estimate that will most likely be lowered in next week's USDA June supply demand report.
Weekly export shipments totaled only 243,400 RB (nearly 200,000 bales below the mark needed to meet USDA's current export estimate). Upland shipments accounted for shipments of 231,800 RB. Pima shipments were 11,600 RB. Primary destinations for Upland were China (78,400 RB); Mexico and Turkey. The primary destinations of Pima shipments were China (4,400 RB); Japan and Pakistan.
The difficulty of locating adequate shipping capacity to Asia was noted in last week's comments. This situation is ongoing and deteriorating further. This amplifies the likelihood that U.S. exports will fall as much as a half a million bales below the current estimate of 14.2 million bales.
In several of the past few years U.S. export shipments during the final two months of the marketing year reached record levels. However, with the decline in shipping capacity, as well as the increasing transportation cost, the infrastructure is no longer adequate to physically move cotton out of the U.S. in the volume of past years.
USDA will release its monthly supply demand report next Tuesday, June 10. U.S. exports could be lowered as much as 500,000 bales, down to 13.7 million. Yet, it should be noted that during the final week of April, the first week of May and the last week of May that U.S. sales average more than 500,000 bales.
Thus, the signal is there that China, the Southeast Asian countries and Turkey will continue to be the major buyers of U.S. cotton. More importantly, the demand is there, but only at a price. Recall that during those respective three week periods, New York futures were essentially trading at or near six month lows.
Certificated stocks will continue to keep a lead hat on the nearby months. However, the December contract is preparing to regain some steam but lets not expect too much too soon.
Weekly export shipments totaled only 243,400 RB (nearly 200,000 bales below the mark needed to meet USDA's current export estimate). Upland shipments accounted for shipments of 231,800 RB. Pima shipments were 11,600 RB. Primary destinations for Upland were China (78,400 RB); Mexico and Turkey. The primary destinations of Pima shipments were China (4,400 RB); Japan and Pakistan.
The difficulty of locating adequate shipping capacity to Asia was noted in last week's comments. This situation is ongoing and deteriorating further. This amplifies the likelihood that U.S. exports will fall as much as a half a million bales below the current estimate of 14.2 million bales.
In several of the past few years U.S. export shipments during the final two months of the marketing year reached record levels. However, with the decline in shipping capacity, as well as the increasing transportation cost, the infrastructure is no longer adequate to physically move cotton out of the U.S. in the volume of past years.
USDA will release its monthly supply demand report next Tuesday, June 10. U.S. exports could be lowered as much as 500,000 bales, down to 13.7 million. Yet, it should be noted that during the final week of April, the first week of May and the last week of May that U.S. sales average more than 500,000 bales.
Thus, the signal is there that China, the Southeast Asian countries and Turkey will continue to be the major buyers of U.S. cotton. More importantly, the demand is there, but only at a price. Recall that during those respective three week periods, New York futures were essentially trading at or near six month lows.
Certificated stocks will continue to keep a lead hat on the nearby months. However, the December contract is preparing to regain some steam but lets not expect too much too soon.
O.A. Cleveland
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