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Challenges Mounting for Cotton Market

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The landscape in the cotton market remains turbulent as front month prices witness a significant dip in both old crop and new crop contracts.

The latest report from USDA’s Ag Attache has added to the uncertainty, with Brazil’s cotton production seeing an increase to 14.9 million bales, although the carryout was slashed by 200k to 11 million. This adjustment has resulted in a raise in net ending stocks to 6.2 million bales. Looking ahead to the 24/25 season, the initial projections show an escalation in cotton planting area to 1.87 million HA and production boosting up to 15.35 million.

Updates from NOAA’s 7-day QPF have shown rainfall expectations in East Texas and Northern Louisiana reaching up to 1 3/4 inches, with Northern Mississippi, Georgia, and Alabama also forecasted to receive an inch of rain over the week. These conditions add another layer of complexity to the market dynamics.

Notably, the Cotlook A Index experienced a sharp decline of 235 points, settling at 95.60 cents/lb by March 28. Additionally, the AWP weakened by 162 points to 70.88 cents/lb. Meanwhile, ICE certified stocks saw an increase of 14k bales, bringing the total to 81,664 bales as of April 1st.

The current numbers depict May 24 Cotton at 90.81, down 195 points, with a marginal uptick of 27 points. Similarly, Jul 24 Cotton stands at 91.71, down 160 points, yet showing a slight increase of 27 points. Dec 24 Cotton is at 84.3, down 5 points, with a minor rise of 3 points in the present scenario.

In compliance with disclosure policies, please note that on the publication date, Alan Brugler did not hold any positions in the securities discussed in this article. All details provided are for informational purposes only. For further clarification, refer to the Barchart Disclosure Policy.

The insights and thoughts shared in this piece represent the author’s perspective and do not necessarily align with those of Nasdaq, Inc.

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