The Cotton Association of India claims their country is boosting cotton production to near record levels as farmers there are planting the biggest area ever dedicated to cotton. Cotton futures have already fell 24% this year on the news of US and Chinese reserves increasing to global record stockpiles.
To further pressure cotton prices, the Indian harvest (beginning in October) is expected to be more than 6M tons previously estimated for India by another agency, and adding to the nearly 6.25M tons of Chinese output. However, Chinese output can fall 24% next year as their government ends direct purchases from farmers.
Barb Levy, chief director for The Fox Group’s futures division in Chicago, shared her insight regarding the current cotton futures situation by stating, “With the Chinese prioritizing their crops, cotton production is expected to be lower, but India’s cotton can more than make-up for China’s shortfall should their weather remain favorable.”
The trend for cotton futures remains technically down at this time. On the first day of trading this month, cotton futures set new contract lows, so I view today’s action as a retracement higher until a clear picture unfolds.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
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