Stock exchange news, cotton. From the last week of December to the 2nd decade of January cotton prices at ICE stock exchange have been rising due to the termination of December contract and transition to trading by March contract (which has lead to the technical price rise). The market has also been supported by Chinese buying in order to replenish state reserves, which has raised import of cotton in December 2011. Droughts in cotton area of the USA have also had their impact on the market.
During the annual cotton conference in the USA farmers have stated that in 2012 they are planning to cut crop areas of cotton by 10-12% (5.26-5.36 mln. hectares) because of low prices and increasing competition of grain crops. Seasonal factors also stipulate growth. USDA January report has had a negative impact on prices.
By the end of 2011-12 season cotton stocks will reach the maximal point for the last 3 seasons. In this reference, major world stocks are concentrated in China, which has recently bought 12 mln. bales of cotton to replenish its stocks. China is likely to start selling its stocks at the end of the season.
Other consumers are trying to minimize their stocks due to price drop and decreasing consumption. January report has a moderately negative impact on the market, as predicted production has dropped by 600 ths. bales
but predicted consumption has dropped even more, by 1.3 mln. bales
according to January forecast, by the end of 2011-12 season cotton stocks will rise by 28.7% to 12.70 mln. tons (58,35 mln. bales)
and the ratio of stocks to consumption amounts to 53%.
Certified stocks at ICE stock exchange have dropped by 18% and amounted to 41.099 ths. bales as of January 12, 2012.
According to the analytics of the Department of Derivatives Trading within Masterforex-V Academy, when the price bounces from the point of 100, it will follow the seasonal trend and will be traded within the range of 90-100 towards lowering.
