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Cotton Futures (Mar 2019)Cotton Futures (Mar 2019)Cotton Futures (Mar 2019)

Cotton Futures (Mar 2019)

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COTTON // sideways after reaching weekly local lowHi✋🏽 Price has reached a weekly low from May '21, and buyers made it go 1-2 from the 1-2-3 wave. We are in the 3rd wave moving up, but price can easily go sideways for some time before breaking out of this zone. The long and the short trigger zone marks the sideways channel. What do you think??? Trade safe! ⚪️⚫️ -------------------------------------------------------------------------------- ANYWAY, a lot of Qs about the direction of the price. But it doesn't matter. I JUST REACT! Thanks for reading my analysis!🤘🏽 Remember that trading is a business. SIZE your TRADES according to your risk aversion! ----------------------------------------------------------
ICEUS:CT1!
by ZenScape
Cotton Testing SupportCotton has been extremely volatile since the May 17th highs with recession fears and weather conditions driving the market lower. The market accelerates its pace lower after the breakdown point on September 1st and is now testing trendline support going back to September of 2021. As we are trading near support and in oversold territory, we could see another bounce to the upside as we saw the last time the market was in this oversold territory, but a close below 82.75 could be a catalyst for more sellers.
ICEUS:CTZ2022
by Ryan_Gorman
1
Supply bull vs. demand bear clouds cotton's outlookCotton prices have been very volatile in 2022. The three-month implied volatility on cotton is currently at 43.7% fast approaching the levels last seen in 2011. A pickup in volatility has historically been an important indicator of a change in trend. Back in 2011, Texas (the biggest growing cotton state in the US) witnessed the driest year on record. The reason for the drought was the weather anomaly La Nina. The La Nina results in an abnormal cooling of waters in the equatorial Pacific Ocean that is linked to severe droughts in the southwestern parts of the US. In the wake of the drought, the US Department of Agriculture (USDA) cut its estimate of 2011/12 cotton production by 1mn bales to 17mn bales. Cotton prices reached a record 215.151 USD/lbs in response. Drought plaguing US’s biggest cotton growing state We are seeing history repeat itself with a persistent drought in Texas this year. The National Oceanic and Atmospheric Administration sees a 72% chance of La Nina between November and January raising the odds for a rare third-straight La Nina to form across the Pacific. USDA has slashed its supply projections for global cotton ending stocks by 1.5mn bales in 2022/23. Production is lowered nearly 3.1mn bales whilst consumption is reduced by 800,000 bales. US producers increased their cotton acreage by 11% this season to 5.05m hectares. But, with the drought becoming more severe over the last couple of months, the USDA expects that the harvested area won’t exceed 2.89m ha. The abandonment of 43%, if confirmed, will be by far the highest since USDA records began in 1960. Owing to historically high abandonment in the US Southwest region, US production estimates are forecast to reach their lowest level since 2009/10. The US is the world’s largest exporter of cotton, having more than 27% share of the world export market. That implies that the fall in US production will dampen the world trade surplus, putting pressure on declining inventories. Harsh climate conditions amongst key cotton producers threaten supply Unpredictable weather patterns have been challenging the cotton crop outlook in other key producer countries as well. Drought is hitting China’s cotton crop in the Xinjiang province, which grows majority of the country’s crop. In China, ending stocks are estimated at 36.2 million bales in 2022/23, the lowest in 4 years2. Australia, Brazil, and Pakistan experienced untimely rains that have reduced a large share of their grades. The World’s stocks to use ratio at 68.25% is at its lowest in five years highlighting the constraints on supply with respect to demand. Cotton’s demand outlook set to weaken amidst slowing global economy Cotton consumption is likely to weaken amidst a challenging macroeconomic backdrop. Europe is on the brink of a recession and the European consumer will be exposed to soaring energy costs. Meanwhile the US consumer’s spending pattern is shifting away from goods to services. In China, the economic headwinds are multifaceted – from a weaking property market, intermittent covid lockdowns alongside supply shortages to strategically imported goods. The outlook for apparel and textile consumption looks tricky. Consumption in 2022/23 is projected lower than a month ago in the US, Pakistan, Vietnam, Turkey, and Bangladesh3. Conclusion Supporting prices higher has been the 25.8%4 rise in speculative positioning over the past month. A 12% unwind in short positioning alongside a 10% build up in long positioning underscores the improvement in sentiment towards the cotton markets. The front end of the cotton futures curve remains in backwardation with a positive roll yield of 3.2% versus 8.5% a month back. Evidently the supply situation remains tight however amidst a tougher macroeconomic environment cotton prices are likely to walk a tight rope. In order for cotton prices to stage a sustained move higher we will need to see an improvement in demand. Sources 1 Source: Bloomberg as of 4 March 2011 2 Cotton Outlook August 2022, Economic Research Service 3 United States Department of Agriculture 4 Source: CFTC, from 19 July 2022 to 16 August 2022 This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
ICEUS:CT1!
by aneekaguptaWTE
Cotton Defending New SupportAfter the gap higher in Cotton last week, we have seen sustained price action out above that gap and is now acting as a strong support pocket going forward. This rally higher was led by weaker crop conditions with the ongoing drought in Texas, and the market is now in a tightening range. With the strong support pocket below and overhead trendline resistance, we could see the market breakout above this trendline resistance and climb higher is crop conditions continue to look poor. Downside risk comes if we see better weather conditions that will help the crop conditions and could take the market back below the gap.
ICEUS:CTZ2022
by Ryan_Gorman
Cotton Pushing Higher On Supply ConcernsThe cotton market was in a steady up-trend for most of the first half of 2022 and broke down sharply from overbought levels. Since the low in mid-July, we have seen a nice rebound off an inverse head and shoulders pattern, and we have continued higher through some critical resistance levels. The market is now testing the 50-day and the 200-day moving average as supply concerns continue with the drought throughout Texas and is looking to breakout to the upside to break the longer-term downtrend from the May highs.
ICEUS:CTZ2022
by Ryan_Gorman
3