Response of U.S. Cotton Export Sales to ICE Cotton Futures Price (Scroll Down for More Discussion)
The red line shows daily settlement of nearby ICE cotton futures, in cents per pound. The blue plateaus reflect weekly net export sales for the 2022/23 marketing year, in thousands of running bales. The graph generally shows the expected demand response to fluctuating futures prices for the 2022 crop. Generally, as U.S. prices fluctuate higher, export sales (“quantity demanded”) fluctuate lower. Usually (as seen in 2019 and early 2020), as U.S. cotton becomes cheaper, more of it is typically sold. As cotton becomes more expensive, mills may buy some to cover their needs, and then sit on their hands waiting for a reversal (or switch to competing suppliers).
Two exceptions to this expected pattern are the tepid cotton sales following the fifty cent price plunge in June and the forty eight cent decline in September-October. Perhaps this is an indicator of an inward shift in demand. Since early November, the more normal pattern has re-emerged, with the bottoming action in late October associated with stronger export sales, and the rally in early November associated with weaker export sales.