Alex Bobrov
Current market situation is such that has been predicted by Commodity Trading Department of . In other words, as we have predicted 2 weeks ago, asset price will reach the highest point of the trading range 68-79, where the price has been staying for the last six months. Nevertheless, having reached point 77, there followed a correctional movement, which has most probably been caused by the closure of positions at the end of the year.
One way or another, the general fundamental background remains bearish; however, traders have already entered the worrying condition of cotton sowing acreage shortage, which (according to the Analytics Team of Commodity Trading Department) will inevitably result in price rise, as due to low cost in the condition of price rise for grain crops it is rather logical to predict that the acreage will be divided in favour of the latter.
The latest statement gives grounds for assumption concerning long-term price development: this year we are most likely to face rising trend at cotton market, but what will it look like?
Taking into consideration 2 profitable years, which have been accompanied by the decline of textile production and, consequently, demand for the product;we are unlikely to see any intensive and durable price movements upwards. For some time the price will be traded at the top point of the range and will finally break it; however, it is likely to form another higher range or will simply extend the existing one.
Current market situation is the following: there are no serious market drivers, the yield is harvested timely, and there is nothing that hinders it. There appear data on bad weather in several regions, but for the majority of cotton-producing regions the weather will be favourable. In other words, in the nearest future the price is expected to move within the flat range of 75 - 80 dollars per bale.
Alex Bobrov
