Cotton Prices Remain Stagnant Despite Steady Export Sales: Cotton Grower

Cotton prices remain trapped in a narrow trading range despite consistent export sales, as demand shows no signs of improvement, according to an analysis published by Cotton Grower.

Dr. O.A. Cleveland of Cotton Grower highlights the current market dynamics, where low prices have encouraged export sales of all cotton growths, including U.S. cotton. However, the level of sales is insufficient to indicate any significant uptick in demand.

"Low prices have encouraged export sales of all growths and U.S. cotton continues to move," Dr. Cleveland writes. "Yet the level of sales is not sufficient to suggest that demand is improving. In fact, the level of sales does not even suggest any improvement in demand."

As a result, cotton prices are expected to remain within the current trading range of 77 to 83 cents per pound for both old crop and new crop futures.

Weather conditions in the U.S. Cotton Belt will play a crucial role in determining new crop price activity, particularly in the moisture-dependent regions of Texas, Oklahoma, and Kansas. While the region has experienced pleasant weather recently, additional rainfall will be necessary for crop development after germination.

The analysis emphasizes the importance of rainfall during the month of July, stating that it will "provide the framework of price activity for the remainder of the 2024 growing season."

The analysis also points out that a significant portion of recent export sales has been directed towards China, primarily for their reserve program rather than immediate mill use. While these sales are positive for overall demand, they do not reflect immediate consumption and therefore have a limited impact on current market prices.

"The market will react to yarn sales and garment sales, the ultimate demand factor for cotton – not raw cotton sales," Dr. Cleveland explains.

Cotton prices are likely to remain stagnant until there is a noticeable increase in demand from spinning mills and garment manufacturers, reflecting true end-user consumption.