Cotton futures traders are learning yield recoveries will be the catalyst for some recovery in global production next season, rather than extended growing areas – according to the Int’l Cotton Advisory Committee. Cotton futures are up 43 points today currently trading at .5636 per pound at the Intercontinental Exchange.
Apparently it was adverse weather and “pest problems” in many of the cotton growing countries that was responsible for last year’s 7% decrease per hectare. The yield rebound is particularly expected to take place in Pakistan where the last harvest was especially plagued by whitefly – responsible for hundreds of millions of dollars of agri-economic losses.
“With competing crop prices falling so low, and cotton prices remaining comparably stable, we should also see some sort of pick-up with farmers planting more cotton,” said Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, sharing his fundamental assessment of the cotton futures market. Brady added, “Perhaps the whitefly helped keep cotton prices stable, but this next season we could see an acceleration of lower cotton prices if there is indeed a pick-up in acreage.”
Cotton futures trend is “down” with no bottom yet in sight. New cotton futures lows were made on Monday, and with the lack of follow-through to the downside perhaps we can see a technical rally before the next leg down.
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.