Notre vision du marche Coton - Vendredi 21 Mars 2019 -
Contre toute attente, le marché fait un nouveau plus haut pour l’année 2019.
Finally we saw some new highs for 2019 this week.
The market had been pushing the 75.50 c/lb ceiling all week with yesterday it breaking out to the 77 c/lb level. It seems this rally was triggered by a supportive USDA shipment report with strong sales and shipments.
Demand wise it was India that stole the show this week. Their strengthening currency, slowing arrivals of cotton and higher local prices meant mills/traders turned to the import market with some vigor.
Indian yarn is becoming more expensive than other markets which is allowing Bangladesh and Vietnam to sell some of their yarn and reduce stocks. Feeling is that these two markets will need to import cotton again soon, but for now both are quiet.
We have to wonder now what a US/China trade deal might signify for our market. Is it already priced in? If a deal is concluded will we rally further into the 80’s, it seems more and more likely.
With demand being poor for so long, it is starting to feel like we are turning a corner and it is coming back. Mills will need high grade cottons in the coming months as lower grades have been in abundance. If the market can hold 77 for a few days then we may see a further move up towards the 80 level supported by spec liquidation. Trade continues to hedge their positions but more so in December rather than on the July month.