Response of U.S. Cotton Export Sales to NY Futures Price (Scroll Down for More Discussion)
The red line shows daily nearby ICE cotton futures settlement price, in cents per pound. The blue plateaus reflect weekly net export sales, in thousands of running bales. The graph basically shows the expected demand response to fluctuating prices. In general, as U.S. prices rise, export sales drop off. As U.S. cotton becomes cheaper, more of it is sold. Between late 2014 and early 2016, when futures dipped below 60 cents there was a bump in cotton bales demanded for export. This suggested nearby futures price support in the upper 50s. The flip side of that was that when prices rose above the lower 60s, the quantity demanded dropped off. This implied an apparent equilibrium range between roughly 58 to 65 cents.
From late 2016 through June 2017 there was a notable expansion of export demand for U.S. cotton. This is reflected above by an upward trend in both price and export sales. The fluctuations along that trend still correspond to the expected price-quantity relationship expected from economics.
Since June 2017, the fluctuations of price and export sales continue as expected, but around a much lower, flatter trend. The more recent data also imply near term export demand support above 67 cents.