Weekly cotton market review 12/14/2020.
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TECHNICAL ANALYSIS OF COTTON
Last week, ICE U.S. cotton futures closed higher at $74.08 cents per pound.
ICE U.S. cotton stocks were down to 86544 bales. Total cash transactions totaled 6,30082 bales this week compared to 5,31144 bales the previous week, an increase of 9,8938 bales this week compared to 5,0282 bales the previous week and 1,4261 bales at the same time last year. Demand has been good, with China, Pakistan and Vietnam showing interest.
Harvesting is complete in most areas, but continues further north, in Oklahoma and Kansas, with an advance of about 80%.
According to the latest USDA report, the 2020/21 global cotton production forecast has been revised down to 113903K bales from 116112K previously. The decrease is due to US and Indian production. World cotton consumption estimates have been revised upwards to 115625K bales from 114050K previously. The 2020/21 market will therefore be in deficit, with a drop in stocks to 97520K instead of the 101435K initially forecast. The stocks according to the forecasts will therefore be down but historically high.
On the international level, the ECB has increased its asset buyback program by 500 billion, the US support plan has been delayed again and again, and a brexit no-deal is increasingly likely. The FDA in turn is approving the use of Pfizer's vaccine, and vaccination begins this week in the US. In terms of the pandemic update, we have just surpassed 72 million cases worldwide, with more than 1.607 million deaths. The U.S. is still the most affected country, and will approach and surpass the 300,000 mark in deaths and more than 16 million cases.
The Dollar consolidated last week as the DXY closed higher at 90.976, with the long-term trend still bearish.
WEATHER IN THE UNITED STATES
The hurricane season in the North Atlantic is officially over, and the U.S. cotton harvest is also coming to an end. Rainfall in October was above normal, but lower than normal in November. Last week, many areas experienced their first significant frost of the season. Wet and cold weather, with slightly above normal rainfall in the delta was reported last week.
ICE US CERTIFIED COTTON STOCKS
ICE cotton stocks at the height of the harvest season were down to 86544 bales for 101220 last week. Stocks are above the five-year average for the same period.
THE DOLLAR
The DXY index representing the Dollar against a basket of foreign currencies closed last week up at 90.976, although the long-term trend is still bearish. The DXY consolidated last week. The ECB increased its asset repurchase program by $500 billion, and, the U.S. support plan is still lagging behind, still failing to agree on emergency aid of just over $900 billion. The dollar has also strengthened against the pound sterling, on an increasingly likely no-deal, as the disagreements seem so deep.
A low dollar is generally favorable to dollar-denominated commodity markets.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The speculative net position on the cotton futures markets is down this week to 67.96 K instead of 70.799 K.
TECHNICAL ANALYSIS OF COTTON
Last week, ICE U.S. cotton futures closed higher at $74.08 cents per pound.
ICE U.S. cotton stocks were down to 86544 bales. Total cash transactions totaled 6,30082 bales this week compared to 5,31144 bales the previous week, an increase of 9,8938 bales this week compared to 5,0282 bales the previous week and 1,4261 bales at the same time last year. Demand has been good, with China, Pakistan and Vietnam showing interest.
Harvesting is complete in most areas, but continues further north, in Oklahoma and Kansas, with an advance of about 80%.
According to the latest USDA report, the 2020/21 global cotton production forecast has been revised down to 113903K bales from 116112K previously. The decrease is due to US and Indian production. World cotton consumption estimates have been revised upwards to 115625K bales from 114050K previously. The 2020/21 market will therefore be in deficit, with a drop in stocks to 97520K instead of the 101435K initially forecast. The stocks according to the forecasts will therefore be down but historically high.
On the international level, the ECB has increased its asset buyback program by 500 billion, the US support plan has been delayed again and again, and a brexit no-deal is increasingly likely. The FDA in turn is approving the use of Pfizer's vaccine, and vaccination begins this week in the US. In terms of the pandemic update, we have just surpassed 72 million cases worldwide, with more than 1.607 million deaths. The U.S. is still the most affected country, and will approach and surpass the 300,000 mark in deaths and more than 16 million cases.
The Dollar consolidated last week as the DXY closed higher at 90.976, with the long-term trend still bearish.
WEATHER IN THE UNITED STATES
The hurricane season in the North Atlantic is officially over, and the U.S. cotton harvest is also coming to an end. Rainfall in October was above normal, but lower than normal in November. Last week, many areas experienced their first significant frost of the season. Wet and cold weather, with slightly above normal rainfall in the delta was reported last week.
ICE US CERTIFIED COTTON STOCKS
ICE cotton stocks at the height of the harvest season were down to 86544 bales for 101220 last week. Stocks are above the five-year average for the same period.
THE DOLLAR
The DXY index representing the Dollar against a basket of foreign currencies closed last week up at 90.976, although the long-term trend is still bearish. The DXY consolidated last week. The ECB increased its asset repurchase program by $500 billion, and, the U.S. support plan is still lagging behind, still failing to agree on emergency aid of just over $900 billion. The dollar has also strengthened against the pound sterling, on an increasingly likely no-deal, as the disagreements seem so deep.
A low dollar is generally favorable to dollar-denominated commodity markets.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The speculative net position on the cotton futures markets is down this week to 67.96 K instead of 70.799 K.
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