Cotton futures may be finding support in the not-so-distant futures if the Int’l Cotton Advisory Committee’s assessment is correct. They say the current five-year low in cotton (futures) “will prompt farmers world-wide to reduce planting” and of course, by interrupting the cotton production process, cotton (futures) prices, by default, will rise and benefit the farmers once again.
The executive director of the committee has already expressed these sentiments by stating at a cotton industry conference held in Mumbai today that “the impact of lower (cotton) prices is already evident in planting intentions in the Southern Hemisphere including Brazil.” Here in the US, the USDA is said to estimate the world’s largest consumer of cotton, China, will cut-back on their imports from both India and the US.
Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, had this to say regarding the current cotton futures situation, “Cotton farmers seem to be in a major competition to off-load their (cotton) supply.” Craney added, “Eventually, once the process of declining cotton prices, lost revenue for the farm – some farmers even going out of business is played out, cutting back on cotton production is a certainty as part of the process.”
Cotton futures trend is down with no bottom in sight. I had been short cotton futures coming into today for the second time in the past week, but have been stopped out today. I still anticipate cotton futures to breakout lower to the lower .50c range soon.
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.