DTN Cotton Open: Higher on Technicals

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The market is higher Monday morning as tenacious technicals are encouraging buyers to increase their holdings. Most publicly accepted technical indicators, such as moving averages and stochastics are giving off positive readings.

Those setups, in conjunction with cotton’s seasonal tendency to swing higher into spring, is keeping the market glued together. Yet, beside the friendly appearing charts, there remains hope a U.S.-China trade deal will soon be a reality.

Monday afternoon, USDA will report on the planting progress of the 2109 crop. As it stands, plantings are small, but essentially running normal. However, there are pockets where adverse field conditions are delaying work.

As of April 11, cumulative sales stand at 96.2% of USDA’s original forecast. The five-year average for this time of year is 95.9%. Thus, even without China, U.S. sales have caught and surpassed that multi-year pace. Naturally, if an immediate trade deal can be reached, and China enters the export market in a big way, then old crop business could be all the more dynamic.

In other news, the Trump administration is seeking to eliminate all waivers it gave to certain countries which had been importing Iranian oil. With that, crude oil futures are a dollar-fifty higher Monday morning.

This week will see May cotton enter its delivery. To that end, certificated stocks have increased from 55,517 to the present 57,655 bales. Of course, USDA will issue its latest round of sales and exports this Thursday. Last week’s data, although respectable, were not the numbers nor participants the market was hoping to see. Perhaps this week’s data will be an improvement.

For Monday, close-in support for July cotton stands at 77.93 cents and 77.55 cents, with resistance at 79.15 cents and 79.57 cents. Overnight estimated volume is 3,385 contracts.

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