LUBBOCK, Texas – Cotton analyst Jarral Neeper provided a cautiously bullish outlook for the 2004 cotton market at an April 7 Futures and Options Workshop conducted in Lubbock and sponsored by the New York Board of Trade, Cotton Incorporated and Plains Cotton Growers.
Neeper, vice president of marketing for Calcot, noted during his presentation that based on current projections, December 2004 futures could possibly reach the 70-to 75-cent level based on the tight 2003 crop carryover situation.
He noted that 2004 consumption estimates he has pulled together closely match his projected 2004 production based on current planting estimates. He noted that current world carryover stocks have only been at or below current levels four other times: 1980, 1989, 1990 and 1993.
The wildcard in the world situation, he noted, continues to be China because of that country’s high rate of consumption and the ability to drastically effect what happens in the United States and other countries.
He said that should China's crop develop to the point that few imports are required to meet their textile industries needs, and the U.S. crop were to also produce average or better yields across the board, a downward move could occur.
He noted that current market volatility will likely continue, especially between now and June, while the northern hemisphere crop is planted. He advised producers to consider acting should the market find a way to break through the 70-cent level in the next two months and develop a strategy to protect against future market movements.
Calcot Ltd. Is a producer-owned cooperative based in Bakersfield, Calif.
Shawn Wade is a writer for Plains Cotton Growers Inc.