Jack Scoville is an often quoted market analyst in the grain and soft commodities sectors. You will find his commentary throughout the Reuters, Wall Street Journal, Dow Jones, Bloomberg, and Barron's publications. Contact Mr. Scoville at (312) 264-4322
General Comments: Futures were higher again yesterday on more talk of strong export demand. Talk indicates that the buying was active over the weekend and has remained active early this week. Ideas of less planted area also supported Cotton futures again, but most of the talk was of the new demand. The current low new crop prices are bringing into question what farmers in Texas and the Delta and Southeast will plant this year. Some are wondering if planted area might be lower this year here in the US due to weak prices against competing crops. The area lost would go mostly to Corn and Soybeans. The plantings intentions report will be released at the end of the month. Texas areas should turn drier for the rest of the week. Delta and Southeast areas will see mostly dry weather.
Overnight News: The Delta and Southeast will see dry conditions. Temperatures will average mostly below normal this week and then near to above normal. Texas will get dry weather. Temperatures will average below normal today, but above normal starting Thursday until near normal temperatures come back on Sunday. The USDA spot price is now 81.46 ct/lb. ICE said that certified Cotton stocks are now 0.436 million bales, from 0.431 million yesterday. ICE said that 1 contract was delivered yesterday and that total deliveries for the month are 1,542 contracts. USDA said that net Upland Cotton export sales were 150,200 bales this year and 67,100 bales next year. Net Pima sales were 24,200 bales this year and 1,900 bales next year.
Chart Trends: Trends in Cotton are up with objectives of 89.00 May. Support is at 85.80, 85.20, and 84.00 May, with resistance of 87.50, 88.90, and 89.20 May.
DJ SURVEY: USDA March 2012-13 U.S. Cotton Harvest Estimates
NEW YORK (Dow Jones)–The following are analysts’ estimates in millions of bales for 2012-13 U.S. cotton production, exports and ending stocks, as compiled by Dow Jones Newswires ahead of the March federal forecasts. The U.S. Department of Agriculture is scheduled to release updated estimates at 12:00 pm EST Friday.
Parentheses denote the number of estimates in that average and range.
Average Range USDA USDA
Production (9) 17.1 17.0-17.2 17.0 15.6
Exports (9) 12.6 12.4-13.0 12.5 11.7
Ending Stocks (9) 4.4 4.1-4.8 4.5 3.4
Production Exports Ending Stocks
Citigroup 17.0 12.5 4.5
Daniels Trading 17.0 13.0 4.3
Eastern Trading 17.2 12.4 4.8
Flanagan Trading 17.0 12.6 4.4
INTL FCStone 17.1 12.7 4.4
John Robinson 17.0 12.5 4.5
Knight Futures 17.0 12.8 4.1
Plexus Cotton 17.2 12.7 4.5
Rabobank 17.0 12.5 4.5
DJ U.S. January Cotton Exports-Mar 7
In kilograms and in running 480-pound bales. Source. U.S. Department
(*)NOTE: Year ago figures reflect data reported at that time.
——- In Kilograms ——-
Jan 13 Dec 12 Nov 12 Jan 12(*)
Upland, under 1 inch 4,986,927 6,558,307 6,531,394 11,901,814
1 to 1 1/8 inch 167,961,047 135,645,317 82,701,010 131,961,423
upland 1 1/8 and over 151,332,544 89,189,145 63,821,381 125,193,901
Amer pima, over 1 1/8 inc 12,959,231 7,990,645 6,455,267 13,545,349
All cotton 337,239,749 239,383,414 159,509,052 282,602,487
——- In Running 480-Pound Bales ——-
Jan 13 Dec 12 Nov 12 Jan 12(*)
Upland, under 1 inch 22,905 30,122 29,998 54,665
1 to 1 1/8 inch 771,439 623,014 379,843 606,094
upland 1 1/8 and over 695,065 409,642 293,129 575,011
Amer pima, over 1 1/8 inc 59,521 36,701 29,649 62,213
All cotton 1,548,930 1,099,479 732,619 1,297,983
DJ ICE Change Streamlines Process for Making Cotton Tenderable
By Alexandra Wexler
NEW YORK–IntercontinentalExchange Inc. plans to streamline the process by which cotton bales are made tenderable to its benchmark No. 2 futures contract by offering the option of having the fiber classed only once by the U.S. Department of Agriculture, eliminating a second exchange-administered classing.
The new process, referred to as “Smith Doxey Registration,” would be offered in addition to the current Certified Classing process. A bale would be considered suitable for delivery on the ICE cotton contract as long as it has been classed under Smith Doxey within the six months prior to tendering it to the board.
“It will speed up the process to some degree and make it easier for cotton to come to the board,” said Sharon Johnson, a senior cotton specialist at Knight Futures in Atlanta, which would save market participants time and money. But “how much cotton is actually brought to the board going forward will still be mandated by the marketplace,” she said.
Under the current Certified Classing system, cotton is classed once by the USDA and then again by the exchange. The new option would eliminate the second classing.
“I really think it streamlines the process,” Ms. Johnson said. “It was kind of redundant to have cotton classed a second time.”
Bales classed under Smith Doxey Registration would be tenderable for the March 2014 contract. The change is still pending approval from the Commodity Futures Trading Commission, ICE said.
ICE has also tinkered with the quality specifications for the bales classed under Smith Doxey. Under the new system, the exchange would no longer allow bales with a color classed as “light spotted” to be tenderable. In addition, the range of micronaires, or fiber width, tenderable to the cotton board was narrowed, eliminating the narrowest and widest widths.
The last change that ICE made to the No. 2 cotton contract was announced in March 2012, which allowed cotton with a fiber length of 1 4/32 inches to receive a commercial premium. Previously, any bale with a fiber length of 1 3/32 or higher was allotted the same premium.
“This will likely have more of an impact on the merchant side, more than on the (futures) trading side,” said Gary Raines, an economist at INTL FCStone in Nashville, Tenn.
DJ China Zhengzhou Cotton Futures Closing Prices, Volume
Thursday, March 7 2013
Product Settle PrevSettle Change Open High Low Volume Open Int
CF303 19,435 19,400 35 19,440 19,440 19,430 10 588
CF305 20,260 20,265 -5 20,290 20,320 20,210 3,462 25,864
CF307 20,125 20,190 -65 20,135 20,140 20,110 24 238
CF309 20,185 20,195 -10 20,200 20,280 20,115 111,082 148,984
CF311 20,280 20,260 20 20,315 20,340 20,240 130 1,106
CF401 20,140 20,150 -10 20,165 20,200 20,100 2,414 21,170
1) Unit is Chinese yuan a metric ton;
2) Change is the day’s settlement minus previous settlement;
3) Volume and open interest are in lots;
4) One lot is equivalent to 5 metric tons.
General Comments: Futures closed a little lower as temperatures in Florida moved a little higher. It was a cold weekend in Florida, and frosts and freezes were possible over the weekend. Temperatures had been warm in the state until the weekend, and conditions are dry, and talk about the potential for more fruit drop and poor development of the crop for next year returned. Crop development is reported to be far enough along that some damage or loss is possible. Some buds could have been lost and that will mean less production potential for next year if the loss is confirmed. Traders also note that dry weather is stressing trees and could hurt overall production potential for next year. Harvest in Florida of mid and early oranges is almost over, and the Valencia harvest is underway. Bloom has been reported in groves in all production areas of the state. Brazil is seeing near to above normal temperatures and light showers and could use more rain. ICE said that 0 notices were posted against March contracts and that total deliveries for the month are 0 contracts.
Overnight News: Florida weather forecasts call for mostly dry conditions. Temperatures will average below normal.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 117.00 and 109.00 May. Support is at 120.00, 118.00, and 115.00 May, with resistance at 125.00, 129.00, and 132.00 May.
General Comments: Futures were a little higher yesterday after trading both sides of unchanged. Ideas of big supplies, mostly from Brazil, keep the selling alive. Some support came from news that Colombia Coffee farmers will not deliver as they seek higher prices for crops and some support came from even more reports of severe rust damage in Central America. Reports of rust in Central America and the production cuts that it are still in the press, and rust is now reported in Peru. Central America could lose at least 20% of the total crop this year. Losses next year could be 30% or more of the crop. Current crop development is still good this year in Brazil, and production areas are getting drier weather for the developing crop. There is some talk the drier weather could stress trees. Production ideas remain big there. Vietnam producers there talk about the potential for 25% crop losses due to prolonged drought in the Central Highlands. Central America crops are mostly harvested. Colombia is reported to have good conditions.
Overnight News: Certified stocks are higher today and are about 2.709 million bags. The ICO composite price is now 131.69 ct/lb. Brazil should get mostly dry weather. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry conditions. Temperatures should average near to above normal. ICE said that 0 contracts were delivered today against March futures and that total deliveries for the month are 108 contracts.
Chart Trends: Trends in New York are mixed. Support is at 137.00, 134.00, and 131.00 May, and resistance is at 145.00, 147.00, and 149.00 May. Trends in London are mixed. Support is at 2080, 2070, and 2040 May, and resistance is at 2130, 2140, and 2170 May. Trends in Sao Paulo are mixed. Support is at 177.00, 174.00, and 171.00 September, and resistance is at 183.00, 185.00, and 187.00 September.
General Comments: Futures closed a little higher. Chart trends in London and New York are now mixed. Big supplies of Sugarcane and Raw Sugar keep price trends in check, and the market remains in a sideways trend even though trends are trying to turn up. Production has been strong in Brazil so far this year, and reports say that the new crop production looks to be strong as well, so the diversion into more domestic ethanol use will help offset increased sugarcane production. Exports from Brazil continue to be very strong. Exports from other countries are said to be less than expected, but the Brazil offer keeps futures from doing much these days.
Overnight News: Mostly dry weather expected in Brazil. Temperatures should be near to above normal.
Chart Trends: Trends in New York are mixed. Support is at 1790, 1770, and 1740 May, and resistance is at 1860, 1875, and 1900 May. Trends in London are mixed. Support is at 513.00, 512.00, and 506.00 May, and resistance is at 520.00, 523.00, and 527.00 May.
General Comments: Futures closed lower in consolidation trading. New York was the leader on the downside as the US Dollar moved higher. Market trends are still down overall, but futures are within about 100 dollars of a potential swing low based on the charts. Ideas are that current low prices should créate new demand and that the main crop harvest is over in Western Africa and much of Asia so that supplies on offer could also be less. The weather is forecast to be warm and dry in West Africa this week. For now, traders expect good mid crop production from West Africa. Malaysia and Indonesia crops appear to be in good condition and weather is called favorable. Traders are starting to look ahead and past the midcrop harvest and note that the market could move to a production déficit next year. More buying is being noted in deferred months at this time due to smaller production ideas for the coming crops.
Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average above normal. Malaysia and Indonesia should see episodes of scattered showers, but Malaysia will be drier this weekend. Temperatures should average near normal. Brazil will get scattered showers and warm temperatures. ICE said that 0 contracts were delivered today against March contracts and that total deliveries for the month are now 826 contracts. ICE certified stocks are lower today at 4.363 million bags.
Chart Trends: Trends in New York are down with objectives of 2050, 2020, and 1990 May. Support is at 2050, 2020, and 2000 May, with resistance at 2100, 2110, and 2130 May. Trends in London are down with objectives of 1390 and 1365 May. Support is at 1360, 1330, and 1300 May, with resistance at 1405, 1435, and 1450 May.
Questions? Ask Jack Scoville today at 312-264-4322
Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented is from sources believed to be reliable and all information is subject to change without notice.
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