Price Plunge: Old and New Crop Futures Take a Hit
Old crop cotton prices witnessed a significant drop of 147 to 184 points during the Thursday close. May contracts almost touched the daily low, resting just 4 points above it. This recent decline has brought May cotton back to the 18-week moving average, with prices plummeting by nearly 17 cents per pound from the contract highs. New crop futures weren’t spared either, closing with losses ranging from 37 to 58 points. December futures are now 1.73 cents per pound away from the February high.
Strong Feb Cotton Shipments and Sales
Recent Census data revealed a surge in February cotton shipments, totaling 1.54 million bales. This figure represents a substantial 30% increase from January and a notable 12% rise from February of the previous year. By the end of February, the accumulated cotton program had reached 6.46 million bales, slightly surpassing last year’s total of 6.34 million bales.
Mixed Bag of Cotton Sales
According to the USDA, 85,000 running bales of cotton were sold during the week ending on 3/28. Although this marked a 14% decrease week-over-week, it was a positive 4% higher than the four-week average. Additionally, Foreign Agricultural Service (FAS) data indicated new crop bookings of 23,000 running bales, primarily driven by sales to Honduras.
Brazil’s Growing Influence on Cotton Market
The USDA’s Agricultural Attache raised Brazil’s cotton production forecast by 340,000 bales to 14.9 million, while simultaneously reducing carryout by 200,000 bales to 11 million. As a result, net ending stocks were revised upward to 6.2 million bales. Looking ahead to the 2024/2025 season, initial projections suggest an increase in cotton-growing area to 1.87 million hectares, with production expected to reach 15.35 million.
Market Indexes and Certified Stocks Update
The Cotlook A Index experienced a significant dip of 235 points, closing at 95.60 cents per pound on 3/28. Furthermore, the Adjusted World Price (AWP) weakened by an additional 140 points, settling at 69.48. ICE certified stocks saw an increase of 14,000 bales, reaching 81,664 bales as of 4/1.
May 2024 Cotton closed at 87.14, down 184 points,
Jul 2024 Cotton closed at 88.57, down 161 points,
Dec 2024 Cotton closed at 83.52, down 58 points
Disclosure: Alan Brugler does not hold any positions in the securities discussed in this article. The information provided is for informational purposes only.
The opinions expressed in this article solely belong to the author and do not necessarily represent those of Nasdaq, Inc.
