Cotton rally frays as US export sales tumble


No prizes for guessing why cotton futures are trading lower.

New York’s March cotton contract stood down 1.6% in late deals at 80.52 cents a pound – on course for what would be its first close in three months below its 20-day moving average.

The main culprit was US export sales data for last week which came in at just 67,700 running bales for upland cotton - down 75% week on week.

While, as Agrimoney has been reporting, the likes of Louis Rose at Rose Commodity Group have been cautioning of the potential for a poor figure, that one was especially dismal, the lowest but one of the 2017-18 marketing year, which started in August.

Forward sales for 2018-19, at 107,800 running bales, exceeded old crop demand, for the first time this season.

‘Logistics have become a nightmare’

Nor were actual shipments that strong, at 232,547 running bales,

That was down 57,000 running bales week on week, and well behind the weekly pace of some 350,000 running bales needed to meet the US Department of Agriculture’s forecast for the whole of 2017-18.

Investors might be tempted to think that prices above 80 cents a pound, where prices rose to in the latest week, are a deterrent to buyers, who even if they to fork out on fibre may be forced to wait for delivery. (That said, of course, the declining dollar may alter such calculations.)

Ron Lee at McCleskey Cotton, talking earlier of the laggardly pace of shipments, said that “the main problem I am almost positive of in this situation is the lack of trucks available to ship this cotton to the various ports in the US.

It almost doesn’t matter what you are selling and trying to move these days, logistics have become a huge issue and a nightmare in some cases.

“There is simply a huge shortage of trucks in this country at the moment,” and new regulations on the likes of driver hours “are not helping matters”.

Grains in demand

Some of the other US export data was more upbeat, including export sales of 1.45m tonnes of corn last week, ahead of market expectations of a figure between 900,000-1.25m tonnes.

Wheat export sales, at 427,200 tonnes, were nearly triple those of the week before and the best since before Christmas, if within the 200,000-500,000 tonne range that investors had expected.

Volumes for all the major classes – soft red winter, hard red winter, hard red spring, and white wheat – showed improvement.

Sluggish soy

However, soybean export sales, at 616,300 tonnes, were down 50% week on week and short of expectations of a figure of at least 850,000 tonnes, and potentially 1.20m tonnes.

There had been hopes that with the dollar easing, and Brazil’s harvest off to a slow start, that US soybean export performance would pick-up.

It will need to indeed if US exports are to reach the 58.8m tonnes that the USDA has pencilled in for 2017-18, down less than 400,000 tonnes year on year.

Actual soybean exports so far are, at 32.1m tonnes so far in 2017-18, down 14.2% year on year, with commitments (completed exports and unfulfilled orders), at 43.24m tonnes, down 13.7%.


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