DTN Cotton Close: Late-Week Gains Offset Early Week Pressure

©Debra L Ferguson Stock Images

Strong buyer support has moved through the cotton market Friday with the trade holding moderate to strong gains at the end of the week. Early buying activity offset early week losses across nearby contracts.

Strong buyer support has quickly moved back into the cotton complex with all contracts listed on the exchange posting gains over 2 cents per pound. The fretting and hand-wringing that has gone on over the last several days concerning potential widespread pressure that may develop as tariffs go into effect seems to have lost its momentum early.

The fact that there is very little new news to digest when it comes to tariffs and the overall trade war and there no way to immediately know how much or what affect this will have on overall trade and export demand allowed traders to breathe a little easier now that “tariff day” has arrived.

December cotton futures rallied 2.49 cents per pound with prices listed at 84.45 cents per pound. December continues to be the contract with the most open interest by a large margin, as 175,315 contracts remain open. Contrast this with July and October, which hold just over 250 contracts combined, and March contracts seen at 46,372 contracts. The overall lack of volume in the market Friday is mostly due to the holiday on Wednesday. More volume and potentially more market support may be seen in the complex early next week.

Overall stocks moved to delivery points surrounding the midweek holiday break were 92,135 bales delivered on July 3, while 31,351 bales were delivered July 5. Aggressive Decertified Orders were seen July 5, with a total of 61,833 listed. Much of the activity is focused on the short trading week, and the midweek holiday continues to limit the overall consistency of market activity in all areas.

Cash cotton sales on the Seam Daily cotton price report as of July 6 were a total of 176 bales sold, with the total sold through the season, which started July 1, at 984 bales. Average prices were seen at 0.6488 cent per pound, with an average loan price of 0.4647 cent per pound. This amounts to an average premium over loan price of 0.1841 cent per pound. A total of 28,674 bales were offered for sale with the majority of these remaining unsold.

The latest weekly export sales report showed 16.18 million bales of cotton were exported last week. This compares to 14.55 million bales seen for the same week last year. The uncertainty of how trade tariffs will affect further sales has continued to drive June sales and export numbers.

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