Not a good week price-wise. Continued improvement in soil moisture for Texas cotton country and forecasts for more simply dominate now. Here’s the week in review:
Cotton planting has reached 74%, up from 62% last week but now 7 pts behind the 5-year average vs. last week’s 2 pt lag. That produced a bit of rebound in futures for a couple days but then selling resumed. Technicals are awful. A downside break-out of a ‘bear flag’ formation in the December contract projects further weakness to the low 70s and possibly even sub-70 if improvement soil moisture continues in Texas, planted acreage reaches intended acreage and yields are near normal. Of course, those are a lot of “ifs”! Sub-70 cotton is only a remote, worst-case possibility and probably not there very long if it happens.
The weekly crop progress report commenced updates on cotton ‘squaring’ this week and it stood at 5%, down just 1 pt from the 5-year average and a point better than last year.
The International Cotton Advisory Committee (ICAC) released its own latest forecasts this week and while it seemed somewhat constructive, traders took little notice. ICAC puts 2014/15 global beginning stocks at 91.6 million bales vs. USDA’s May WASDE figure of 97.9 million. ICAC puts 2014 global production at 115.5 million bales; the same as USDA’s May estimate.
It then puts global consumption for 2014/15 at 111.1 million bales, a bit below USDA’s May estimate of 111.9 million, but it all still works out to ICAC projected global ending stocks of 96.1 million bales versus USDA’s May estimate at 101.66 million. Be sure to check the website about noon central time on Wednesday for our review of the June WASDE, market reaction and any advice changes.
