Société Générale with actual forecast on cotton
Société Générale forecast rises ahead for certain commodities, while rating a sell on cotton as one of its top bets
However, the bank’s primary trading recommendation in crops was to “sell rallies” in December cotton futures, terming “unsustainable” the rally which has taken the contract 8.5% higher so far this year to 75.45 US cents a pound.
New York cotton futures are up 11.5 % in 2017 on a spot contract basis.
“Sales from state reserves in China, improvement in supply from India and record production in Australia are likely to ease the tightness in the cotton export market in the coming months,” Mr Singla said.
“In addition, substantial improvement in farmers’ profitability is likely to restart cotton acreage expansion across the world,” with higher prices supporting spending on seeds and sprays which will “support yields in 2017-18 as well”.
The bank, while raising its price forecasts for the fibre a touch, termed cotton an “attractive short story”, seeing futures average 70 US cents a pound in the October-to-December period.