Indian Ban Boosts Cotton Futures

Today the world’s second largest cotton exporter suddenly halted cotton shipments without prewarning.  India’s Commerce Ministry abruptly halted cotton exports until further notice, while the country’s cotton association has called for a formal review.

The USDA estimated India to provide almost 17% of world cotton sales before the ban.  No reason was given in India’s official statement, either.

Today, without warning, the Indian government put a ban on cotton exports, shooting the market limit up. There has been no explanation for the move by the Indian government, so far and we would expect another (cotton futures) limit up day again tomorrow unless we get more of an explanation from them. Tread very carefully in this (cotton futures) market as it is inherently thin as it is and limit moves can happen very fast as we have seen in the past couple of years,” said Chris Hildebrand, vice-president of trading for HighGround Trading Group in Chicago, regarding the current cotton futures situation.

Cotton futures had been in a mild down-trend before this news, and now after limit-up, the market has bounced back up to resistance.  I will have to await the dust to settle in this market to allow a lower-risk entry…

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