By Don Shurley
Cotton prices closed up 77 points to 63.81 cents/lb on Friday recovering from a rather lackluster week. Prices have trended down since closing at 65 cents back on October 13. Prices had dipped to 62.29 on Monday(Oct. 20). Friday’s uptick closed the week up 81 points from the previous week.
Friday’s close is above the recent downtrend. The longer-term direction is still sideways, however, with a range of mostly 62 to 67 cents.
March and May futures prices are at a discount to nearby December—March at 62.17 and May at 63.02. This “inverted” market is a signal that the crop is in more near-term demand compared to the future. Reports suggest there is support for prices near-term due to delayed harvest in some areas and lack of producer selling due to low prices. Producers are not likely to sell at these prices and an increased amount of cotton may go to Loan.
For the week ended October 19, the crop was 29% harvested compared to 31% average and 20% last year. Most states in the Southeast were near normal or ahead of normal; but, Texas was slightly behind normal and the Mid-South was behind normal.
Fiber quality in the Southeast has thus far been very good. A summary by state shows most cotton with Color grade of 31 or better and staple 35 or longer. Three SE states (Florida, South Carolina, and Virginia) are averaging 36 staple. Fiber length Uniformity has thus far averaged 81 or better in all 6 states. Basis in the Southeast is very good, especially for better grades—41-4/34 is currently +25 points December and 31-3/35 is +350 points. The Loan premium for 31-3/35 is 330 points.
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