ICE Cotton futures continued its slide this week and traded below the 9 day moving average for the entire week. The spot N4 dropped a total of 323 points over the course of the week to close at 89.82, lowest settlement since beginning of March this year.
Physical activities continued to be lackluster, as demand is scarce at the current price level. Total of 36k running bales were committed during the week ending May 8th for upland and pima combined, but shipments were decent at above 228k running bales. With just 12 weeks left until end of the current marketing year, we'll need to ship a little over 150k running bales per week to reach the USDA export target, which should be easily reachable. The May USDA supply & demand report released its first forecast for the 2014/2015 crop year with improved stocks to use ratio for both the world and the U.S.
The U.S. production is pegged at 14.50 million stat bales and exports at 9.70, resulting an ending stock of 3.90 million bales. For the week ending May 13th, large specs and index traders reduced their net long position in cotton during the market sell off as shown by the COT report released. The cotton chart is looking technically negative for right now, but we still need to wait and see if the July contract keeps trading below the important support level of 90 cents, or bounce right back up. The coming week should be able to give us a clearer view of the market direction.