Wt Cotton Discussion Threads

[resource investor] 13/1/2008 16:15

no probs mate!

[rogerbridge] 13/1/2008 15:49

Thanks,RI.

[resource investor] 13/1/2008 15:09

I will be very suprised of COTN doesn't go through the roof on Monday.

[resource investor] 13/1/2008 13:12

Schwieterman: Bullish USDA Grain Numbers, Depressing Cash Cattle Trade

1/11/2008 5:02:00 PM


Schwieterman: Bullish USDA Grain Numbers, Depressing Cash Cattle Trade



The USDA numbers out today were extremely bullish. They always say that you have to feed a bullmarket and today's data certainly accomplished that. It is hard to say what the most bullish figure was, but I am going with the corn ending stocks estimate of 1.438 billion bushels. My reasoning is that the sharp drop in corn ending stocks is not only bullish for corn, it is bullish for soybeans, wheat, cotton, and for agriculture in general.



Anyone who has been bearish recently has been bearish due to the idea that corn stocks are adequate and that it wouldn't be a problem to switch acres back to soybeans.



What the USDA told us today was that even though we increased corn acres by 15.3 million, we were only able to increase ending stock by 134 million. Demand will grow by more than 134 million bushels by next year, which means that ending stocks will decline further next year if we have the same size of crop next year. A decline in ending stocks next year is not a big problem. The big problem is that we need to see a large increase in soybean acres and they have to come from somewhere. Corn will give up a few, and cotton a few, and wheat a few, and the soybeans won't get as many as needed. The competition for acres was going to be fierce anyway, but this cut in stocks will make it even more so.



There were two main reasons for the cut in corn ending stocks: First was a cut in production. Corn yield was dropped from 153 to 151.1. Second was a 300 million bushel increase in the feed usage estimate. I talked about that possibility last week, and that is sure enough what happened. USDA had to correct an accounting error made in August.



The second most bullish figure today was the 500,000 acre decrease in Kansas wheat. That surprised a lot of people. I figured we would have a small increase, but the weather must have been a bigger problem that we thought last fall. A good wheat crop will still be able to build our stocks, but the consensus opinion was that we were going to have more HRW acres to work with, not less.



New all time highs in the gold and platinum this week, and new contract highs in the silver.



CORN:

Trend: Short Term Up – Long Term Up

Sentiment: Can the corn really give up acres?



The March corn was about 28 cents higher this week due in part to Friday's limit higher move. New crop December was up about 26. The trend is up, the news is bullish, and the next major objective for the corn market is a test of the all time high of $5.54 ½.



Export sales were a little slow in this week's report, but it was another holiday week and the sales total was still more than adequate. Next week's report could be very big though, because we saw some large sales to S. Korea, Taiwan, and unknown destinations this week. The high prices are not slowing them down and if the sales pace doesn't slow, we could see another cut in ending stocks.



Action: I still like at the money March call options and I still don't want to get beyond 25% priced on the new crop. I think that Friday's data will provide strength in the market for a while.



WHEAT:

Trend: Short Term Down – Long Term Up

Sentiment: Where did the wheat go?



The wheat was lower for the week, but it made a good comeback on Friday. The March KW lost 22 cents and the July lost 6. At mid week the charts looked bad and the news wasn't good. It looked like we were in for a very deep correction, but we had a decent recovery on Thursday and Friday's numbers were extremely bullish.



The fact that winter wheat acres were at only 46.61 million instead of the 48.657 traders were looking for was friendly, but the fact that HRW was actually lower than a year ago is bullish. It should also make the Kansas City and Minneapolis vs. Chicago spreads work very well.



The other bullish factor we had this week was that even though export sales were only 7 million bushels, that was still 2.4 million more than we need to meet the USDA estimate. So, even though USDA raised the ending stocks estimate by 12 million to 292, they may have to cut it at a future date due to an increase in the export estimate. We do not have a big enough supply of wheat to sell 7 million bushels a week. We still need to ration demand.



Action: I like at the money March KW calls and I don't want to do anything further on the new crop for the time being.



SOYBEANS:

Trend: Short Term Up – Long Term Up



Sentiment: Don't underestimate the beans.



March soybeans gained 37 cents and the November gained 77 ½ cents this week. Traders referred to today data as neutral to the soybeans, but a cut in ending stocks to 175 million, just means that the beans need even more acres this spring. There is a reason that the November contract was limit up Friday and that is the beans need acres and it doesn't look like they will get them.



There is no slowing down in the demand for vegetable oil for either bio-fuel or human consumption. As long as that is the case it is going to be hard to be negative. Our export sales numbers have been slow the past two weeks so I suppose there is a chance that USDA will be able to cut the export estimate, but it is still a long time until the crop year is over.



Action: There are just so many bullish factors and bullish what if's in the bean market that I just can't get excited about making any sales. If you have to make sales you have to buy call options that is all there is too it. I like the idea of $13 - $15 bull call spreads in November. I would prefer it if you didn't sell anything, but if you do that is a good was to replace bushels.



CATTLE:

Trend: Short Term Down – Long Term Down

Sentiment: Lower cash



$92 cash trade this week. That is depressing. I started the week thinking about $96. The beef market was essentially flat and I thought the February LC futures had found support. I was wrong. It is like we have two separate markets right now. The February LC, which is stuck in a down trend, and the deferred months which keep trending higher. I guess you go with it. I don't see any reason to be an aggressive hedger from June forward. February and April are a different story.



The feeder cattle are also a different story. I think we will eventually test the 2007 low at the $92 area. If the corn stays strong it will happen sooner rather than later.



Action: Be patient with hedges from June forward and keep buying at the money feeder cattle puts.

[resource investor] 12/1/2008 09:24

Nice to see you here abundance!!!!
I think you're the 2nd person that I am aware of from the PHAG crew that I have convinced to move into softs...you won't regret it.
I have started a new thread and I will be using it instead of this one.
IMVHO CORN could go 50-70% higher this year, yes it is a bit of a gamble but I think I'm right, that's why I have even moved my sipp into CORN.
I also have a much smaller position in COTN which I think will rocket at least 30% this year too. Like you say I wish I had more cash to put in and I wish I had done it earlier too.
It's brilliant.....stock markets collapsing and we're still making thousands.....

[abundance99] 11/1/2008 23:18

I'm keeping you company RI! I think we're investing in a lot of the same things - although I wasn't as brave as you to go so completely into one commodity (I believe I read that you had moved almost everything from PHAG into CORN). Great result for you today.

I'm into PHAU, PHAG, AIGA, AIGG, SUGA and COTN. Was in AIGC but moved into COTN instead this week - why be exposed to base metals and energy when a recession is here? Stick with the things that are recession proof. Am amazed at how much money I am making these days (you must be doing well too). Just wish I had more to put in!

[resource investor] 11/1/2008 21:10

I am really tempted to put more cash into COTN:


Cotton Rises on Higher Commodity-Fund Demand, Acres Competition

By Shruti Date Singh

Jan. 11 (Bloomberg) -- Cotton rose to the highest price since March 2004 on speculation investors such as index funds are boosting purchases while surging grain prices intensify competition for U.S. farmland.

Soybeans rallied to a record today and wheat reached its highest price since Dec. 17. Index funds increased their long positions, or bets prices will rise, 2.1 percent to 101,567 contracts for the week ended Jan. 1, according to the U.S. Commodity Futures Trading Commission. Deutsche Bank AG in a report today said it favors corn, soybeans and cotton partly because of ``global land and water constraints.''

``There is a new asset allocation shift happening,'' said Peter Egli, director of risk management for U.K.-based Plexus Cotton. ``The acreage shift, that's going to be more pronounced. The higher soybeans go, the more you convince farmers to shift acres.''

Cotton for March delivery rose 3 cents, or 4.5 percent, to 69.96 cents a pound at 1:48 p.m. on ICE Futures U.S., formerly known as the New York Board of Trade. That's the highest price for a most-active contract since March 5, 2004.

Global investments in commodities rose by almost a third to $175 billion last year, the second-biggest jump ever, according to Barclays Capital.

Cotton acreage fell 29 percent to 10.8 million acres last year after corn reached a 10-year high in February. Analysts expect more cuts in acreage this year.

[rogerbridge] 11/1/2008 18:54

Excellent!

[resource investor] 11/1/2008 18:53

Cotton up 4.48% on CBOT............this is too good to be true!

[resource investor] 11/1/2008 17:14

Welcome all and may COTN reward us all!

[resource investor] 11/1/2008 17:11

ETFS Corn (CORN) is designed to track the DJ-AIG Corn Sub-IndexSM and pays a capitalised interest return which cumulates daily. The Sub-Index is an "excess return" index and the interest component combines to give a total return investment

[win2003] 11/1/2008 16:44

Nice progress since end November....

[resource investor] 11/1/2008 15:00

This is sure one lonely thread!

[resource investor] 08/1/2008 17:19

Nice rise today guys, more of the same please!

[resource investor] 07/1/2008 15:52

Just put about £1200 into this one, should be good for 2008.

[win2003] 28/12/2007 09:12

Happy Xmas, best wishes for 2008, all!

[win2003] 28/11/2007 16:14

Indian cotton crop at 270 lakh bales in 2006-2007

27 Nov, 2007 - India
The Cotton Advisory Board announced that per hectare yield of cotton has increased to 501 kgs in 2006-2007 (478 kgs in 2005- 2006). The yield of Indian cotton crop stood at 270 lakh bales in 2006-2007 (244 lakh bales in 2005-2006). The average global level yield stood at 744 kgs per hectare in 2006-2007.

As per the International Cotton Advisory Committee (ICAC), the global cotton production is expected to be 25.22 metric tonnes (mt) for 2007- 2008 (25.31 mt for 2006-2007). The world consumption of cotton is estimated at 26.70 mt in 2007-2008 (26.19 mt in 2006-2007).

The average cotton price is expected to increase to 62 cents per pound in 2007-2008 (58 cents per pound in 2006-2007).

Source: India Business Insight

[the jock] 24/11/2007 15:53

The general consensus is that farmers are switching out of less profitable crops like cotton and rice and moving into more lucrative ones like wheat and corn which have benefited from the ethanol boom. This caused a dramatic drop in the planting of cotton since 2006 and is set to continue in 2008.
Meanwhile demand for cotton is showing no signs of slowing down around the globe,especially in China......

[win2003] 08/11/2007 10:07

Eriksay, your portfolio sounds like mine (and a lot of other people as well, no doubt), metals, mines and oil. I think I agree with you, some soft ETFs for diversification in these turbulent times - and IMHO they'll get more turbulent as we approach the next major crunch - are looking like a very good idea.

[eriksay] 08/11/2007 09:54

The other day Jim Rogers mentioned cotton along with coffee and sugar as some key areas in softs for investors looking to diversify. His view on grains were that they were over blown after a good run but(as well as getting out of the dollar) he was still advocating agricultural products as a key area going forward for investors.

I am mainly into silver/gold, miners and oil but I may add some soft ETFs. Probably pound cost average into them over a period of time. I'm not into futures or CWs - got bitten a while back when I played (an appropriate term!) with them.