Market Up And Down, But Not Down And Out

May 12, 2015

By Dr. O. A. Cleveland

With some exceptions, cotton’s week was spent up 60, down 60, up 80, down 80 – backing and filling the entire week.

Fundamentals were highlighted by a bearish export sales report, fully expected due to the prior week’s six month highs. However, the report provided a slight bounce, in that actual shipments were very bullish.

Technically, the price support keys provided strong support, just as the price resistance keys were effective in keeping the market within its six cent range between 61 and 67 cents. The market is still attempting to flex its arms and muscles a bit to the top side. This pattern will continue.

Market activity seemed subdued all week, as traders attempted to sort out the bullishness of the prior week that followed with triple digit losses the prior Friday. Nevertheless, the week ended on a positive note, as the spot July contract closed well above 66 cents and the new crop December closed just under 66 cents. In fact, the market secured a late weekly closing charge to reach the plus category for the week.

It was just January when most were clamoring for 56 to 57 cents, and the equilibrium level was just a mere 60 cents. Now, having moved to 65 cents, the equilibrium should be expected within 250 points of 65 cents. This opens the way for a test of 68 cents, basis the July contract. With export activity as brisk as it has been, the market is well positioned to bust out of its tight range and ease slightly higher.

Open interest continues to build in the market, but one major fund continues to be exceptionally long in the futures market. There is some concern that should that long begin to exit some of its positions, the market could lose as much as 200 points. Thus, there continues to be significant risk to the downside of the market, but generally only within the trading range.

Yet, should that fund maintain its positions, then the declining U.S. acreage should be enough to hold prices within the top end of the range while it pecks to the upside in an effort to test higher prices. The market has solid support in the 65.50 cent area, with the next level being 100 points lower at 64.50. The first resistance level can be seen at 67 cents, with the next 100 points higher at 68.00 to 68.25. Above that, the objective would be 71 to 71.50 cents.

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Video: Evolution of Beef Cattle Farming

The Clear Conversations podcast took to the road for a special episode recorded in Nashville during CattleCon, bringing listeners straight into the heart of the cattle industry. Host Tracy Sellers welcomed rancher Steve Wooten of Beatty Canyon Ranch in Colorado for a wide-ranging discussion that blended family history and sustainability, particularly as it relates to the future of beef production.

Sustainability emerged as a central theme of the conversation, a word that Wooten acknowledges can mean very different things depending on who you ask. For him, sustainability starts with the soil. Healthy soil produces healthy grass, which supports efficient cattle capable of producing year after year with minimal external inputs. It’s an approach that equally considers vegetation, animal efficiency, and long-term profitability.

That philosophy aligned naturally with Wooten’s involvement in the U.S. Roundtable for Sustainable Beef, where he served as a representative for the Colorado Cattlemen’s Association. The roundtable brings together the entire beef supply chain—from producers to retailers—along with universities, NGOs, and allied industries. Its goal is not regulation, Wooten emphasized, but collaboration, shared learning, and continuous improvement.