November 24, 2016

COTTON MARKET REPORT

ICE Cotton No2 Futures Mar17, Daily

Nov23

Nov16

change

ICE No2 Dec16

73.08

72.13

0.95

ICE No2 Mar17

71.64

71.69

-0.05

ICE No2 May17

72.31

72.28

0.03

ICE WCT Dec16

73.70

73.85

-0.15

ICE No2 Dec16-Mar17

1.44

0.44

1.00

72

ICE WCT Dec16-No2 Dec16

0.62

1.72

-1.10

70

12'023

68

80
78
76

239'770

49'664

47'559

2'105

66

80.70

79.05

1.65

64

16'275

16'070

205

101.700

100.410

1.290

A-Index
ZCE May17
USD Index

62

Nov 16

ICE No2 certified stocks

Oct 16

251'793

Sep 16

ICE No2 futures o.i.

74

ICE Cotton Futures

Prices hoovered along the range resistance at 72.50 for most of the week but could not break it (basis Mar17).
There were some interesting down moves intra week, notably last Thursday and yesterday, when prices fell
sharply only to recover within a short time. Generally, the market seems largely undecided on where to go.
On the outside markets, one was watching the USD trading ever higher. But the real surprise was more that
cotton stayed relatively unimpressed by that.
The most noteworthy action though is in the intercrop spread July/Dec17, which was trading as high as
233pts premium. It is certainly one thing worthwhile to have a close eye on for the months to come.
The technical picture remains unchanged from last week (basis Mar17):
Short-term key resistance at 72.50, then 73.00-73.50. Support at 70.70-70.00 followed by 68.50

USD Index, Weekly

ZCE Cotton Futures May17, Daily

17500
17000
100
16500
16000
95
15500
15000

90

14500
14000

85

Nov 16

Sep 16

Nov-16

Aug-16

May-16

Feb-16

Nov-15

Aug-15

May-15

Feb-15

Nov-14

Aug-14

80

Oct 16

13500
13000

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November 24, 2016

COTTON MARKET REPORT

USA For the week the maturing Dec16 ICE cotton maintained its premium over the March contract which
now takes on the roll as the lead month. We also keep an eye on the new crop Dec17 contract which will
eventually have influence on planting decisions for next seasons crop. Early indications are for another increase in planted acres due to the price relationship between cotton and competing crops. Excellent yields
across the cotton belt are also helpful. The weekly pace of U.S. cotton harvested slowed to 8% points behind
the five-year average pace, but this is of no real concern. Ginning wise, to date slightly more than 8.0 million
bales has been receipted in the U.S., roughly at the halfway point for ginning. Trading continues in the U.S.
though not quite as active as witnessed last week. Recaps are in circulation across all regions of the U.S. The
in-country basis is showing some signs of weakening and on the whole is definitely weaker than prior seasons.
India - Indian cotton prices traded slightly weak on increased supplies and better selling in the physical market.
Cotton arrivals were reported around 131500 bales as of 24th of November compared to 76500 bales last
week. Lint prices for Shankar-6 are reported to be around INR 39400 per candy ex-gin (73.05 c/lb based on
the prevailing exchange rate). The Indian rupee against the USD is testing the 3-years low at 69.04 as investors flee the risk of emerging market assets on expectations of a rate increase next month by the US Federal
Reserve.
The MCX Cotton 29 mm contract is consolidating within a range of 19000-19500 (basis Dec16).
China The May17 became the most active (highest open interest) contract. Despite strong rallies in other
commodities, especially in rubber, cupper and coal, it has been a relatively quiet week at the ZCE cotton
futures market. Prices barely managed to build value above 16000, setting the contract high at 16910 as the
next upside target. A close below 15600 would void the short-term positive outlook.
Harvesting is slowly coming to an end, while ginning in XJ already reached 2.74m tons by 23.11. After the
recent price increase in the domestic market, spinning mills are reluctant buyers, as yarn prices didnt follow
up so far. Imported cotton is price-wise attractive to anybody with quota available; but here too, buyers are
hesitant to pay the higher prices based on current ICE. So turnover both in the domestic and import markets
has been rather limited.
Today the NDRC just has officially announced that Reserve sales would start on the 6 th March and continue
until August, with daily offered quantities being about 30000 tons. That could possibly have some bearish
effect, as the announced date is a bit earlier than anticipated.

The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Private customers should
not invest in these products unless they are satisfied that the products are suitable for them and have sought professional advice. All information in this report is obtained from sources believed to be
reliable and we make no representation as to its completeness or accuracy. The information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit
of customers.

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