Cotton Futures Uptrending on Higher Exports

Cotton futures reached seven-week highs yesterday in a newly emerged up-trend based on less cotton mill usage and increased exports. Yesterday’s USDA Crop Production report revealed 2014/15 domestic cotton estimates showing less mill production and the higher exports compared with last months data. Cotton futures closed down today about 26 points from yesterday’s seven-week high at New York’s Commodity Exchange Center.

More insight from yesterday’s report also showed estimated production and and total inventories unchanged from the last estimate in January. However, there was slower than expected consumption through December, but that balanced against stronger than expected foreign sales and demand for medium to high-grade cotton.

Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, shared his fundamental analysis insight regarding the current cotton futures situation by stating, Based on what appears to be 31% of world market share on cotton, we may very well be in the beginning stages of something bigger for cotton futures.” Medina added, This level of US exports for cotton is the most in four seasons, so demand is there.”

Cotton futures have rolled over to a newly established up-trend just last week. I am cautiously optimistic on being long, hover cotton futures have not had a significant test of their lows from last month which concerns me.

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