Additionally, the price ratios for cotton verses competing crops clearly suggests a reduction in the land area seeded to cotton in 2007. This realization will also support a rally into February.
A primary reason for the anemic export sales is a result of the heavy sales and shipments at the end of the 2005-06 marketing year-June and July 2006. The spike in export shipments resulted from the expiration of the former Step 2 competitiveness payments to exporters.
There was a mad rush as the marketing season drew to an end to ship as much U.S. cotton overseas as possible. Much of that cotton, especially shipments to China was on consignment and went directly into storage rather than to immediate yarn production.
That cotton is being used now, thus the lack of strong exports at present. However, exports of U.S. cotton will strengthen with the arrival of January 2007.
Thus, with harvest of the Northern Hemisphere crop, early 2007 will usher in the normal seasonal rally and an improved export business.
The coming two week will likely see more of the same as we head into the October USDA World Supply Demand Report. The market is slightly lower, but with a rebound coming in two three months.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
