Annual Review - How did we stack up?

Accurately predicting the price direction of any market is no easy task, so some may say trying to predict the price of cotton during extremely volatile seasons is just plain dumb. As one of the most volatile commodities in the world, cotton traders become accustomed to seeing large intraday ranges with extended peaks and troughs, but 2022 was testing for even the most seasoned of traders. In a year which began with huge optimism and ended in major disappointment, few got away unscathed. In conjunction with our partners, we do our best to make sure our clients can make informed decisions by providing access to regular real time analysis, with conclusive price targets. To prove that what we are doing makes a difference, we feel it is important to share a review of our performance, which can be backed up by historic reports.

Generic 1st ‘CT’ Future (Cotton No.2 Continuous) - Apr 2021 to Present

Below are a summary of the key turning points highlighted in reports on aforementioned dates during the 2022 calendar year, together with hindsight commentary in red.

25 June 2021 (for context) - Advised that the cotton balance sheet remained friendly and outside markets supported a swift move into the 100’s for 21/22 season. On 28 September 2021 we broke 100 c/lb.

2 January 2022 - Saw prices exceeding the previous CTH22 high of 118.50 c/lb (target mid to high 120’s) and prices holding above 100 c/lb for the remainder of the 21/22 season. Prices hit target area within a month before ultimately breaking higher, holding above 100 c/lb until CTN22 First Notice Day.

28 March 2022 - Called market top in mid 130’s based CTK22 with a flat exposure recommendation until volatility settles. CTN22 didn’t peak until 4 May at 155.95 c/lb meaning failure to participate in the final circa 20 c/lb, but had already captured plenty of upside and pleased to have flat risk.

28 April 2022 - Identified the price of new crop CTZ22 (circa 125 c/lb) as a “golden opportunity” to lock in high prices for the 22/23 season. CTZ22 settled down at 83.94 c/lb by First Notice Day.

24 June 2022 - With prices having already fallen below 100 c/lb, it was suggested for the first time that prices could move to the mid 70’s before the end of the season. A view that few (if any) shared at the time. Time would prove this target would be hit sooner than expected.

10 July 2022 - Called a short term bottom at 88.10 c/lb with anticipation of a countertrend bounce to low 100’s. Market had a one day flash lower to complete the trough at 82.54 c/lb before bouncing strongly.

14 August 2022 - On account of a very bullish WASDE report, revised the upside target to 120 c/lb with recommendation to sell rallies approaching this level. Reaffirmed bearish downside target of mid 70’s. Market collapsed from 120 c/lb to 85 c/lb by end of September.

22 October 2022 - Advised a new range of 73-86 c/lb would play out for an extended period of time before eventually breaking down below 70 c/lb towards the end of the season. Market tested the 70 c/lb level sooner than expected before bouncing back to the top end of the range.

5 November 2022 - Argued that any attempts to break 90 c/lb would be met with resistance and therefore advocated selling rallies to the high 80’s/low 90’s. Market failed to convincingly break 90 c/lb despite several attempts, before falling back within the previously advice 73-86 c/lb range.

13 November 2022 - Extended the view that the market was fully valued in the mid-high 80’s, with bearish bias down to low 70’s, and caution about remaining short below 7o c/lb for any length of time. Market has continued to trade within this range as of the time of writing.

If you would like access to the 2023 roadmap, please get in touch to discuss the various options we can offer.