October 26, 2017

COTTON MARKET REPORT

Oct 25 Oct 18 change ICECottonNo2FuturesDec17,daily

ICE No2 Dec17 69.31 67.63 1.68
ICE No2 Mar18 69.06 67.33 1.73
ICE No2 May18 70.06 68.28 1.78
ICE No2 Dec17-Mar18 0.25 0.30 -0.05
ICE No2 futures o.i. 233'822 229'812 4'010
ICE No2 certified stocks 2'047 4'465 -2'418
A-Index 17/18 80.25 77.85 2.40
ZCE Jan18 15'055 15'075 -20
MCX Cotton Dec17 18'410 18'000 410
USD Index 93.711 93.363 0.348

ICECottonPricesmovedupstronglyfromrecentlowsamidlargevolumeatthebeginningweek.Themain
driverforthefirmermarketwasthenewsthatproducersinGujarat,thelargestcottongrowingstateinIndia,
aresupposedtoreceiveanextra(large)bonusthisseason(seeseparatecomments).Theoutlookforfreezing
temperatureslaterthisweekinWestTexashasalsobeenasupportingfactor.

Theopeninteresthasseenafirstincreaseinquitesometime,suggestingthatmanagedmoneyfundshave
beennetbuyers.

Thepastfewdayshaveseenquieteractionwithpricesconsolidatingrecentgainsnear/atresistancewhich
isinforcesincemidSeptember.

Technical picture: Settling and building value above 70.00 (basis Dec17) sets 71.50 as first upside target
followedby72.5073.50.Arenewedfailuretobreakandcloseabove70.00wouldsignalamovetominimum
68.5068.00intheshortterm.

ICECottonNo2Futures(activedailycontinuation)andOpenInterest ICECottonNo2Futures,Dec17240min

1 www.reinhart.com
 October 26, 2017

COTTON MARKET REPORT

USAWestTexaswillhaveitsfirstfreezeoftheseasonthiscomingSaturdaymorning.Thisisnotgoodnews
forlaterplantedcottonthatstillneedssometimetofinishout,especiallyonthetopcrop.Growerscontinue
toaggressivelyspraydefoliationanditisestimatedthat90%oftheTexascropwillbeopenaheadofthiscold
weather.Thelatestforecastiscallingforalowof27Fahrenheit(3GradeCelsius)inLubbock,TX.Further
NorthinAmarilloevenlowertemperatureareexpected.Notalloftheunopenedbollsareinthefreezezone,
somearescatteredalsoSouthofLubbock.ThefactthatthefreezealsowillhappenonOctober28th,very
close to the average freeze date of October 30th, the loss is much less then many people fear. We feel a
potential loss of maximum 200000 bales. Harvest has started in West Texas. In the Memphis and
Southeasternareastheharvestingisadvancingfastundergoodconditions.Classingofficesinallareasare
reportingofover170000balesclassedinoneday.Thetenderablequalityisover80%atthemoment,but
willdropwhenmoreTexascottonwillbeclassed.

IndiaDuringtheweek,GujaratstategovernmentdeclaredabonusofINR100per20kgonseedcotton
(equivalentapprox.UScents10perlbforrawcottonlint)overandabovetheminimumsupportprice(MSP).
AllIndiacottonarrivalsreachedto80thousandbalesperdaybasisv/s65thousandbaleslastweek,supplies
arelikelytograduallypickupfromearlyNovember.Gooddemandwitnessedfromthedomesticmillsfor
immediatedeliverycotton.Cotton29mmatMCXDecembercontracttradedupandpricesbouncefromthe
strongsupportof17900.Shorttermtrendisup;pricesmaytradeintherangeof1815018800inthenear
term.

China On Friday the ZCE cotton futures market broke below the 15000 support (basis Jan18 contract).
However,pricesfailedtobuildvalueatnewlevelsandbouncedbackabove15500.Theshorttermtechnical
pictureremainedneutraltobearish.
Harvestingiscontinuingrapidly,andaround70%ofthecrophasbeenpicked.ByOctober24ginningshave
reached1.39milliontons.Millpurchasingremainsratherslow,bothfordomesticandimportedcotton.There
arestillnonewsregardingquotaredistribution,andthedifferencebetweenlocalandinternationalpricesis
back to very high levels around 20 to 25 c/lb. In consequence, yarn import demand is increasing again;
Septemberyarnimportswerereportedat167401tons,comparedto158770tonsinAugustand153962
tonsinSeptember2016.

Theinformationinthisreportisprovidedsolelyforinformationalpurposesandshouldnotberegardedasarecommendationtobuy,sellorotherwisedealinanyparticularinvestment.Privatecustomersshouldnot
investintheseproductsunlesstheyaresatisfiedthattheproductsaresuitableforthemandhavesoughtprofessionaladvice.Allinformationinthisreportisobtainedfromsourcesbelievedtobereliableandwemake
norepresentationastoitscompletenessoraccuracy.Theinformationmayhavebeenacteduponbyusforourownpurposesandhasnotbeenprocuredfortheexclusivebenefitofcustomers.

2 www.reinhart.com