The cotton market experienced follow-through buying from its Tuesday Turnaround. To that end, December cotton posted its highest close of the move. After moving past the May option bearish debacle, the market immediately began to focus on the impending weekly sales and exports report on Thursday. To that point, Wednesday’s strength may have reflected some pre-report anticipation.
Although we have no specific guesses, we would think numbers equal to or greater than last week’s data would be seen as friendly. Also, we would like to see China as an dominant buyer in both crop seasons. Anyway, with the market closed Friday for Good Friday/Easter observance, whatever fireworks might befall cotton ought to conclude quickly.
Technically, the market is in an upward trend, but remains in a short-term overbought state. Thus, with a net-long position held by speculators, the market is vulnerable to another sell-off at a moment’s notice. Also, it is impossible to say when cotton’s seasonal might roll over. Historically, cotton tends to rally into a spring high, tops out and then rolls down into an eventual fall harvest low. Yet, with the crop hardly seeded, it is a long distance until the pickers are running.
Next week we will be more attentive to weather conditions and the state of fields across the Belt. Subscribers might recall this time last year Texas was suffering from a severe drought. However, this season, her fields are essentially ripe with moisture.
May cotton closed Wednesday at 7811, up 17; July finished at 7896, plus 40; December settled at 7741, up 54 points. Wednesday’s estimated volume was 40,600 contracts traded.