Cotton prices have continued to move sideways and have been bound by a range between 61 and 65 cents/lb.
Prices for March continue to trade at a discount to December, which may be reflective of expectations for downward pressure to intensify as the global harvest progresses.
Given the decreases in prices in prices around the world, support operations in several countries have been preparing to intervene.
Notable examples are from India and Pakistan, where government entities support growers by purchasing cotton.
Despite the act of taking possession, these government organizations do not have extensive warehousing capabilities, and the cotton they purchase can be expected to move back into the market relatively quickly.
Correspondingly, the ability of these interventions to create a lasting impact on the global cotton market may be limited.
Domestically, the amount of cotton that might eventually be parked in the loan could have a slight effect on the market.
However, with Chinese import demand expected to be sharply lower, and a record-tying harvest forecast in India, the impact on the global market might be temporary as well.
Recent rains across the cotton belt have yet to have much an impact on crop progress. The proportion of acres harvested is ten points ahead of the reading from same time last year and slightly ahead of the five-year average.
Crop conditions remain steady, with a little less than half the crop rated good or excellent and a little less than twenty percent of the crop rated poor or very poor.
Although sales activity is generally slow this time of year, volumes have been a little weaker than the long-term average in recent weeks.
The crop year began with relatively strong sales outside of China. Since the total volume of sale outside of China is smaller and less volatile than sales to China, the ability to increase sales later in the crop year may be limited.
The slowdown in demand, along a crop forecast to be 25% larger than last season, should keep prices from increasing.