The week ending August 26 saw ICE cotton futures in a roughly two cent sideways gyration that concentrated more around 68 cents (basis December) as the week finished. Dec’16 cotton settled Friday at 68.03 cents per pound, while Dec’17 settled at 67.83. Chinese and world cotton prices were down slightly on the week. Cotton specific news included strong export sales that suggested a possible expansion of the price quantity demand relationship. The strong export sales news was associated with Thursday’s price recovery.
Grain markets were lower at week’s end, perhaps influenced by outside forces (hawkish expectations from the Federal Reserve, and a rally in the U.S. dollar).
The value of Dec’16 put options at meaningful strike prices is something to consider while futures are at or above 68 cents. For example, a 70-63 put spread cost a little under 2.5 cents per pound on August 19.
For further analysis and discussion of near term price behavior, click on the menu above entitled “Near Term Influences”. Longer term price behavior is more influenced by fundamental supply and demand forces, which is discussed above under the “Market Fundamentals and Outlook” menu tab.
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