Reinhart Market Report 1n6m1p

November 24, 2016

COTTON MARKET REPORT

ICE Cotton No2 Futures Mar17, Daily

Nov23

Nov16

change

ICE No2 Dec16

73.08

72.13

0.95

ICE No2 Mar17

71.64

71.69

-0.05

ICE No2 May17

72.31

72.28

0.03

ICE WCT Dec16

73.70

73.85

-0.15

ICE No2 Dec16-Mar17

1.44

0.44

1.00

72

ICE WCT Dec16-No2 Dec16

0.62

1.72

-1.10

70

12'023

68

80 78 76

239'770

49'664

47'559

2'105

66

80.70

79.05

1.65

64

16'275

16'070

205

101.700

100.410

1.290

A-Index ZCE May17 USD Index

62

Nov 16

ICE No2 certified stocks

Oct 16

251'793

Sep 16

ICE No2 futures o.i.

74

ICE Cotton Futures Prices hoovered along the range resistance at 72.50 for most of the week but could not break it (basis Mar17). There were some interesting down moves intra week, notably last Thursday and yesterday, when prices fell sharply only to recover within a short time. Generally, the market seems largely ‘undecided’ on where to go. On the outside markets, one was watching the USD trading ever higher. But the real surprise was more that cotton stayed relatively unimpressed by that. The most noteworthy action though is in the intercrop spread July/Dec17, which was trading as high as 233pts . It is certainly one thing worthwhile to have a close eye on for the months to come. The technical picture remains unchanged from last week (basis Mar17): Short-term key resistance at 72.50, then 73.00-73.50. at 70.70-70.00 followed by 68.50

USD Index, Weekly

ZCE Cotton Futures May17, Daily 17500 17000 100 16500 16000 95 15500 15000

90

14500 14000

85

1

Nov 16

Sep 16

Nov-16

Aug-16

May-16

Feb-16

Nov-15

Aug-15

May-15

Feb-15

Nov-14

Aug-14

80

Oct 16

13500 13000

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November 24, 2016

COTTON MARKET REPORT

USA – For the week the maturing Dec’16 ICE cotton maintained its over the March contract which now takes on the roll as the lead month. We also keep an eye on the new crop Dec17 contract which will eventually have influence on planting decisions for next season’s crop. Early indications are for another increase in planted acres due to the price relationship between cotton and competing crops. Excellent yields across the cotton belt are also helpful. The weekly pace of U.S. cotton harvested slowed to 8% points behind the five-year average pace, but this is of no real concern. Ginning wise, to date slightly more than 8.0 million bales has been receipted in the U.S., roughly at the halfway point for ginning. Trading continues in the U.S. though not quite as active as witnessed last week. Recaps are in circulation across all regions of the U.S. The in-country basis is showing some signs of weakening and on the whole is definitely weaker than prior seasons. India - Indian cotton prices traded slightly weak on increased supplies and better selling in the physical market. Cotton arrivals were reported around 131’500 bales as of 24th of November compared to 76’500 bales last week. Lint prices for Shankar-6 are reported to be around INR 39’400 per candy ex-gin (73.05 c/lb based on the prevailing exchange rate). The Indian rupee against the USD is testing the 3-year’s low at 69.04 as investors flee the risk of emerging market assets on expectations of a rate increase next month by the US Federal Reserve. The MCX Cotton 29 mm contract is consolidating within a range of 19’000-19’500 (basis Dec16). China – The May17 became the most active (highest open interest) contract. Despite strong rallies in other commodities, especially in rubber, cupper and coal, it has been a relatively quiet week at the ZCE cotton futures market. Prices barely managed to build value above 16’000, setting the contract high at 16’910 as the next upside target. A close below 15’600 would void the short-term positive outlook. Harvesting is slowly coming to an end, while ginning in XJ already reached 2.74m tons by 23.11. After the recent price increase in the domestic market, spinning mills are reluctant buyers, as yarn prices didn’t follow up so far. Imported cotton is price-wise attractive to anybody with quota available; but here too, buyers are hesitant to pay the higher prices based on current ICE. So turnover both in the domestic and import markets has been rather limited. Today the NDRC just has officially announced that Reserve sales would start on the 6 th March and continue until August, with daily offered quantities being about 30’000 tons. That could possibly have some bearish effect, as the announced date is a bit earlier than anticipated.

The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and have sought professional advice. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy. The information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers.

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