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 2021/22 marketing year, in thousands of running bales. The graph generally shows the expected demand response to fluctuating futures prices for the 2021 crop. Generally, as U.S. prices fluctuate higher, export sales (“quantity demanded”) fluctuate lower. As U.S. cotton becomes cheaper, as it was during 2019 and early 2020, 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).
In recent weeks we have been seeing the expected fluctuations in quantity demanded in the opposite direction of price fluctuations.