Thompson On Cotton: Mills Find Buying Opportunity
Posted on January 25, 2019
By Jeff Thompson, Autauga Quality Cotton Association
Firm price support has been found around 72 cents, as mills see this as a buying opportunity. I say this to be so, even though we’re all flying blind absent any USDA reports since the shutdown began.
That includes weekly exports sales, monthly supply and demand numbers, as well as weekly commitment of trader’s report.
But there does appear to be minimal downside risk as current price levels continue to attract buyers and the spec community is comfortable patiently awaiting planting intentions and the smoke to clear.
Marketwise, those still looking to price 2018 crop should view 75 cents as a very attractive target. Too many outside forces are at play and formidable resistance will be found there to gamble on it moving much higher. As for new crop, merchants aren’t being very aggressive with their 2019 contract basis, for obvious reasons.
However, I’m always quick to advise: don’t get too hung up when the futures price should be your primary focus.
Remember many priced cotton in the mid 70s last year and were wise to do so. December futures are trading at 74 cents, providing an excellent chance to enter the market, especially considering the overall environment isn’t near as bullish as it was this time last year.