July 7, 2017
COTTON MARKET REPORT
67.66
67.65
0.01
ICE No2 Mar18
67.34
67.29
0.05
ICE No2 May18
67.81
67.72
0.09
ICE No2 Dec17-Mar18
0.32
0.36
-0.04
ICE No2 futures o.i.
206'118
200'457
5'661
ICE No2 certified stocks
314'036
314'986
-950
77.40
77.85
-0.45
ZCE Sep17
14'900
14'880
20
MCX Cotton most active
19'910
20'030
-120
USD Index
96.290
96.010
0.280
A-Index 17/18
76
74
72
70
68
66
Jul 17
ICE No2 Dec17
ICE Cotton No2 Futures Dec17, daily
Jun 17
change
May 17
Jun28
Apr 17
Jul05
64
ICE Cotton
One possibly could have expected to see some more up-side strength following last week’s positive close,
but instead prices quickly reversed direction and fell to near recent lows before recovering near the close in
yesterday’s session. Essentially, the market failed at the first important resistance/retracement area which
sits between 68.50 and 69.00 (Dec17) and confirms that prices remain within a bearish consolidation pattern.
Last week’s Commitments of Traders Report showed that managed money funds have liquidated more longs
and added new shorts. Their net long positon stands currently at about 30’000 lots, which is by 70’000 lots
smaller than the one held per mid-May. It is not common to see such a large position change in such a short
time frame. It is certainly possible that with this week’s action so far, funds liquidated more longs and added
new shorts, hence bringing the net long position further down to a relatively small figure.
Technical picture: the main trend remains negative. Support is at 66.00-66.30, 65.40 and 64.60. Resistance
is at 68.50-69.00, key between 69.50 and 70.60 and critical between 71.60 and 72.20.
ZCE Cotton Futures Sep17, daily
Managed money net position (options and futures combined)
120000
16400
100000
80000
15900
60000
15400
40000
20000
14900
1
Jul 17
Jun 16
May 17
Jun-17
Apr-17
May-17
Mar-17
Jan-17
Feb-17
Dec-16
Oct-16
Nov-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
-20000
Apr 17
0
14400
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July 7, 2017
COTTON MARKET REPORT
USA - USDA’s 2017/18 official Planted Acreage report released June 30 is set at 12.1 million acres of all U.S.
cotton, very much in line with the March Prospective Plantings (12.2 million acres). Industry analysts were
predicting an increase from the March report making the report a bit of a surprise. Never the less, Upland
area is at 11.8 million acres, up 19.5% from 2016/17, while (ELS) planted area rose for the second year, up
29.6%. Texas plantings were up 950’000 acres from 2016, totaling 6.617 million; Georgia at 1.35 million, up
170’000; and Mississippi at 550’000, up 115’000. Oklahoma and Alabama rounded out the five largest states
by area planted at 470’000 and 450’000 acres, respectively. Production: for the time being USDA assumes
ten-year average abandonment, weighted by region and adjusted downward in the Southwest to only 10%
to account for favorable moisture. That results in 19.2 million bales of production. Plugging in the lower June
30th estimate of acreage, and a potentially higher abandonment, drops the production forecast to 18.3 million
bales. We must note that since last Friday’s report, the weather in West Texas has been generally favorable
which raises hopes that the crop can reach its full potential and keep abandonment at least average levels.
India - Good monsoon rains and better prices for cotton have prompted higher cotton plantings over pulses
and selected oilseeds. As per the latest report of the Ministry of Agriculture, planting of Kharif cotton crop in
India has reached 4.791 million ha as of June 29th, up 56.5 percent compared to the same period of last year.
New crop prospects are reported to be good in major parts of the country. Rainfall over Central/Southern
growing regions in the past few weeks has been overall beneficial for the standing crop. The Cotton Corporation of India revealed that current crop arrivals reached 32.67 million bales as of June 30, 2017 in the 201617 season (Oct-Sept) compared with 32.08 million bales in the same period of the last year.
Cotton 29 mm MCX (July contract) traded weak on w-o-w basis. On the daily chart, prices are trading below
the 20 days EMA, which is a bearish setup. Important resistance is seen at 20’250-20’300 and support at
19’600-19’650.
China – Following the last week’s break below the 15’000 support the ZCE cotton futures market reached the
next downside target at around the contract low 14’700-14’600 (basis Sep17 contract). A confirmed break
below 14’600 would change the long-term technical outlook from neutral to negative.
Reserve auction sales have slowed down during the past few sessions, as the part of Xinjiang cotton declined
to only about one third of total offered lots. Desirable lots from Xinjiang continued being bought with great
interest, but cotton from other origins didn't find many buyers; so the overall clearing rate during this week
has moved below 60%. Import enquiries continue, albeit at a slightly slower rate than in the previous weeks.
Due to its attractive basis, US cotton is still getting most attention.
The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Private customers should not
invest in these products unless they are satisfied that the products are suitable for them and have sought professional advice. All information in this report is obtained from sources believed to be reliable and we make
no representation as to its completeness or accuracy. The information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers.
2
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