Cotton market appears lifeless

28 Jul '07

3 min read

Sales for new crop 2007-08 delivery were 93,000 RB for Upland and 14,500 RB of Pima. With only two reporting weeks remaining for the 2006-07 marketing season, current crop sales were expected to be very low.

Export shipments were 450,300 RB of Upland and 5,600 RB of Pima. Thus, the USDA estimate of 13.0 million U.S. bales shipped to the export market will be met. Additionally, next week's announced export sales for 2007-08 should be very good as prices were some two cents lower than currently.

The hype about the back end of the market (December 2008 futures) providing market leadership was clear during the sell off over the past two weeks.

The December 2008 contract fell just over 100 points during the recent market downturn while the December 2007 contract fell nearly 700 points. The current December contract is now off about 500 points compared to December 2008 being just 100 points off.

It is doubtful that the old crop-new crop spread of the Decembers will widen much more. Nevertheless, it should be expected that the spread will hold 400 points or more through the expiry of the December 2007 contract.

We should expect the nearby December to rally to 66 cents or slightly more. Yet, it is likely that the contract will spend most of its time trading between 63 to 65 cents into the harvest.

The market is really just marking time until the August crop report as it gauges the size of both the U.S. andforeign crops. That report will be released August 10. Things will be slow for another week.

O.A. Cleveland

More O.A. Cleveland News... More Textiles News - United States Of America...