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December 31, 2013

O.A. Cleveland Cotton Report

By Dr. O. A. Cleveland

The hit movie in 1989 was Field of Dreams, starring Kevin Costner and James Earl Jones. The movie was built around the theme, "If you build it, he will come."

Moving into 2014, the Chinese textile industry is broadcasting, "If you grow it, we will come." Chinese mills continue to opt for imported cotton over domestic supplies and continue to sort through the marketplace looking for Australian, Brazilian, U.S. and other high quality grades.

U.S. weekly export sales were surprisingly large last week ­ over 200,000 bales ­ as volume sales to China and Turkey continue in the face of the market trading the 83-cent area. The battle between the short term bulls and long term bears dominates trading, as the old crop quality shortage fights with anticipated increases in U.S., Brazilian, Indian and Australian production. Price resistance between 84 and 85 cents continues to be the dominate price feature.

Speculation surrounding the agricultural public policy of the Chinese government ­ and specifically its cotton policy ­ continues to dominate discussion within the cotton market. Most likely, you have already tired of reading comments about:

• The desire of Chinese mills to buy imported cotton;
• The shortage of quality cotton in the world, specifically in the world¹s major exporting countries;
• The 50-to-60 million bales held by the Chinese government and hanging over the market;
• The market dumping of polyester by the Chinese government; and
• The Chinese movement to eliminate cotton production in its traditional eastern production region and move all cotton production to its northwest region.

These factors will remain in the forefront of the discussion regarding the world cotton market. They also support short term market trends and long term bearish positions.

This is my final column of 2013, and I wish all of you Happy Holidays and a wonderful 2014. We are all so blessed, and for me, far beyond what I deserve.

Plantings will increase over the next two-to-three years, and cotton will regain some of the luster it lost over the last two years. Yet, market prices will be challenging. I look forward to interacting with you next year and during the upcoming Beltwide Cotton Conferences.

May you continue to be blessed.

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