Last year at this time, the US cotton trade had sold around 6 million bales from a 12.91 million bales crop.
This year, the US is estimated to produce 13 million bales, but till date; just a little over 3 million bales have been sold, down nearly 50 percent year-on-year.
This difference, year over year shows the need that the cotton market needs to prepare for what is to come, says the Ecom cotton report.
Currently, mills have less cotton on their books and are looking to buy more. The cotton trade would like to sell, but is concerned of going short.
Given this scenario and the fact that farmers are holding back their cotton, something has to give.
Looking to the past, it is expected that NY cotton futures will rise and the strengthening process seems to have began.
Sales of new crop for immediate delivery have been selling at a strong basis. Add to it that, specs seem to be reducing their shorts although they are still net short, the market could be in a nice position to react to the upside.
With that in mind, cotton traders are advised to take decisions now, which will allow them to take advantage in the future.