China, the No. 1 cotton consumer, began to auction off some of its estimated 42.6 million-bale stockpiles
The Government of India has decided to continue with its current policy of allowing export of cotton from the country without any limitations.
The U.S. Department of Agriculture’s (USDA’s) first world 2013/14 cotton projections anticipate that, despite lower production and higher consumption, world stocks will rise for the fourth consecutive season.
China’s stockpiling has held up Cotton prices significantly. Also, India’s wavering policies on Cotton exports have also caused volatility in the Cotton market. However, the USDA is projecting world stocks of Cotton will rise for the fourth consecutive season. China has finally begin to sell its large Cotton stockpiles back into the market initially unwinding its long position in Cotton. India secured it policy to continue to export Cotton with no limitations. All of these new Cotton developments are occurring as the price of Cotton hits yearly highs. A mix of fundamentals and technical’s gives us the belief that now is a great time to go short Cotton.
Notice Cotton’s May 13 Futures contract having difficulty surpassing the $85 level.
Another great way to play falling Cotton prices is by buying call options in the Cotton ETF CTNN