Magazine article Modern Trader

No Baling on Cotton!

Magazine article Modern Trader

No Baling on Cotton!

Article excerpt

Heavy rain and flooding in China have led to record Chinese purchases of cotton, pushing prices to contract highs. Analysts expect that demand to remain strong through the end of the year, though overbought conditions have led to a significant correction, which may not be over. Alaron softs analyst Boyd Cruel says March cotton could drop to 72.60> per lb., a 50% retracement from the 86.00> October high, but any further weakness would need to be the result in a drop in Chinese demand.

"As long as we see consistent demand, if everything remains the same, cotton will consolidate in the range between 72.60 and 86.00," Cruel says.

Adds James Cordier of Liberty Trading Group: "This is a demand-driven market and demand has been high. We're mil friendly to the market long-term, as Chinese demand is higher than anyone ever estimated it would be."

While acknowledging that cotton is currently overbought and due for a pullback, Cordier says that demand will last into the first quarter. …

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