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Don Shurley: This Analysis and Commentary Is Not Affiliated With The University of Georgia

March cotton futures closed down 109 points at 72.15 cents per pound after fluctuating throughout the previous week. A strong export report from the previous week showed the second highest weekly sales of the marketing year, but shipments declined over the past two weeks. The market currently lacks cotton-specific news but will receive USDA estimates on production and supply/demand on December 10th, with uncertainty around potential downward revisions to crop size. Recent price movements reflect broader economic and political factors impacting global demand and sentiment. While upside remains if optimism continues and crop projections shrink, downside risk also exists from demand-dampening COVID trends and economic uncertainty.

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Morgan Ingram
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73 views

Don Shurley: This Analysis and Commentary Is Not Affiliated With The University of Georgia

March cotton futures closed down 109 points at 72.15 cents per pound after fluctuating throughout the previous week. A strong export report from the previous week showed the second highest weekly sales of the marketing year, but shipments declined over the past two weeks. The market currently lacks cotton-specific news but will receive USDA estimates on production and supply/demand on December 10th, with uncertainty around potential downward revisions to crop size. Recent price movements reflect broader economic and political factors impacting global demand and sentiment. While upside remains if optimism continues and crop projections shrink, downside risk also exists from demand-dampening COVID trends and economic uncertainty.

Uploaded by

Morgan Ingram
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Monday—November 30, 2020

Nearby March futures made it a see-saw ride last


week and we begin this week on a down note.
After hitting the 74 cent level on Monday, prices
moved sluggishly during the Holiday-shortened
week but were then aided by a good export report
on Friday.

March closed at 73.24 cents on Friday—up 88


points for the day which helped end the week on
a positive note—up 28 points for the week. The
see-saw continues as March closes down 109
points at 72.15 today.

The market, with exception of weekly export


numbers, currently seems mostly void of any substantial cotton-specific news. USDA’s December
production and supply/demand estimates will come out on December 10. There is still uncertainty
and expectation that the US crop is going to be smaller than the current projection. Recent price
movement seems mostly related to factors reflecting economic and political events on the demand
side—increasing COVID numbers, but encouraging COVID vaccine news, uncertainties of any possible
partial economic shutdown, the Dow pushing above 30,000, the beginning of transition to a President-
elect Biden administration, etc. These factors impact US and global consumer and investor sentiment
and optimism.

Last week’s export report released on Friday (for


the week ending November 19) showed sales of
393,000 bales—the second highest weekly sales
of the marketing year thus far. The largest sales
were Vietnam (186,500 bales) and Bangladesh
(92,100 bales). Net sales to China were only
38,125 bales—after 65,800 bales in sales
cancellations.

Shipments were 210,900 bales with 96,600 bales


to China. After trending up, shipments have now
declined two consecutive weeks.

The market has tested the 73+ cents area. Let’s


be clear—this improvement in price appears due
to multiple factors creating optimism on the
demand side. If this optimism continues and especially if the US crop should get a bit smaller, there
could be additional upside potential. But, it is well worth noting that the Dow was down almost 300
points today and cotton was also down in step. There should be support at the 71 cents area. While
further upside potential is there, we have to have the factors in place to break 74 cents first. This 73
cents area is worth considering for additional sales.

Don Shurley
Marketing and Policy Analyst
Cotton Economist- Retired / Professor Emeritus of Cotton Economics
University of Georgia- Tifton Campus

*****This analysis and commentary is not affiliated with the University of Georgia*****

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