Perceived Demand Buoys Cotton Futures Higher

Just as we have learned of global cotton demand gaining in recent posts, cotton futures have climbed to their highest price since last May.  US cotton farmers – the world’s top exporters of cotton – are standing-by for a decrease in output.

Last year the USDA reported farmers sowing 12.3M acres of cotton, but with more profitable crops enticing farmers to switch, it appears only 9.4M acres of cotton will go into the ground for 2013.  On Friday, the USDA is expected to increase the prediction for global cotton demand as some countries anticipate increased cotton use.

We have tightening ending stocks and increasing global demand for cotton,” said Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, regarding the current cotton futures situation. Moreno added, “The stock market is signaling better economic conditions which will in return push cotton (futures) higher.”

Cotton futures making new highs signals on top yet in sight.  We exited cotton futures a little early last week, but am looking for a lower-risk position to enter back in to.

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