Tech Newswire

Cotton to Face Bulls and Bears in 2020

"Cotton’s 2020 year begins with a bullish tone with strong upside fundamental potential compared to 2019.  The little bull has its legs and has demonstrated some flair with a current seven month high in prices.  It is time to continue north to higher prices.  Let’s review some of the Bullish and Bearish factors facing 2020.  Granted, I will miss some," said O.A. Cleveland in his weekly cotton report.


Here's his outlook for the coming year:



  •  Nearby prices at 70 cent level after falling into the 50’s

  •  The tendency of prices to move to 75 cents after a bearish year

  •  Increasing world consumption amid world economic rebirth

  •  Declining world carryover and declining U.S. carryover

  •  Declining world plantings and slightly lower world production

  •  Exceptionally robust U.S. economy and strong consumer spending

  •  Very active increase in speculative market purchases

  •  Bullish market technical projecting challenge of 75 cents

  •  On-Call sales (March/May/July) out distancing On-Call purchases

  •  Strong December cash sales, removing cotton from grower hands

  •  High yielding and increased lint quality from seed companies

  •  U.S. planted acreage falling 8-12%

  •  Export sales pace well exceeds USDA sales estimate of 16.5 million

  •  Tariff resolutions favors increased exports to China/limits cancellations



  •  Declining U.S. domestic mill use

  •  Market analyst’s perception that the U.S.-China tariff hurts U.S cotton

  •  U.S. acreage lower, but still near 12 million

  •  Weekly U.S. export shipments must average 385,000 bales to reach USDA projection

  •  U.S. carryover stocks still 4.8-5.3 million bales

  •  Unchallenged entry into U.S. of Chinese textile goods

  •  Chinese overproduction due to unchallenged heavily subsidized price paid to growers

  •  Potential for increased U.S export cancellations without tariff resolution


The favorable technical and fundamental factors favor higher prices as the factors indicate.  Both old crop and new crop contracts favor a breach of 75 cents.  Prices for both market years have to potential to move to 77 cents or above.



| Categories: Fiber | Tags: cotton prices, cotton supply | Return


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