Record Cotton crop signals declining prices

The combination of a record Cotton crop and falling consumption will expand Global stockpiles by the most since Y 2005, driving further declines in the price of this year's worst-performing commodity.

Harvests will increase 7.5% to 123.89-M 480-lb bales (27-M metric tons) in the 12 months ending in July, as demand drops to a 3-yr low of 114.27-M bales, the US Department of Agriculture estimates.

Prices may decline 15% to 0.77 lb. on ICE Futures US in New York by the end of next year, from 0.911 currently, based on the median of 12 analyst estimates.

Cotton fell 58% since reaching an all-time high of 2.197 lb in March as investors bet that prices would curb demand and encourage supply.

Rising output from Australia to China to India, is more than compensating for a US decline caused by the worst crop conditions since the dust bowl era of the 1930′s.

Speculators in US futures are now the least Bullish in 2.5 yrs, Commodity Futures Trading Commission data show.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.