Dmitri Lysenko
Last week, the market of cotton reacted with a slight rally to the latest USDA report. The report was merely bullish. However, amid overall economic decline, the price started fluctuating within a narrow range and still stays within it.
Moreover, China was expected to purchase 300K tons of cotton, which should have supported the market. However, China disproved the rumor, thus causing extra pressure.
Another bearish factor is that there are no major buyers apart from China. At the same time, Chinese exporters don’t lack cotton. They are just accumulating strategic reserves. Moreover, the USA, which is the world’s biggest cotton producer, is planning the increase the production of cotton in 2012-2013 despite shorter cotton acres and unfavorable weather (droughts).
According to the Commodity Trading Department of , cotton prices will keep fluctuating in the $65-75/b range for some time in the future.
Dmitri Lysenko
