- Fiber up 22% last week, the most since a 21% rally in December 2012
- Cotton oversold on recession fears; output slide adds to bullish advance
- Cotton could go to $1.07
The outlook for cotton is cautionary for the rest of 2022 after a volatile first half, the International Cotton Advisory Committee (ICAC) says in its latest price projection on the fiber.
It couldn’t have been more prescient with its call.
Last week, cotton on ICE Futures US rose almost 21% for its biggest week in 12 years. Since then, it has dipped less than half a percent, signaling greater upside should the rally resume.
At the close of Tuesday’s trade, the front-month in the so-called ICE cotton settled just shy of 87 cents an lb, after hitting a five-week high of 89.30 cents. Last week’s 21% rally came in a touch below the 22% gain seen during the week to Dec. 3, 2010.
The ICAC said jittery speculators and investment firms concerned about a global recession had driven cotton prices down from early May to mid-June, then again in September through October, when the market hit its lowest since.
Production-wise, drought has also prompted farmers to abandon virtually all non-irrigated cotton, the ICAC noted. It said the deficit could be mitigated by good crops in other cotton-producing countries, although there’s no guarantee that will happen.
Source: Investing.com
