Cotton futures have been trading range-bound for the last three months after selling off from their spring highs earlier this year in anticipation of this year’s cotton harvest now underway. In Alabama, if the cotton growers can escape potential flooding they expect a good crop – and much of it.
In two years time, cotton futures have sold off to half the price it once was, so cotton farmers are having to plant twice as much cotton to compensate for the declining prices. Estimates in Alabama are calling for average yields of about 850 pounds to the acre, so their cotton gins in some locations are running 24-hours a day.
Jeff Evans, a Senior Broker and Vice-President of the Managed Accounts Division for RMB Group in Chicago, shared his insight regarding the current cotton futures situation by stating today, “While earlier this year I was near term bullish cotton, the recent shift in global currencies devaluing against the US Dollar has caused commodity prices in general to trend lower. Quite simply, a stronger US Dollar buys more cotton (priced in Dollars) and this trend is likely to continue for some time.”
Cotton futures trend is technically down, albeit sideways to lower for the past three months. I am short cotton futures with an expectation for the market to head lower to the .57-.55c level into the latter part of this month.
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.