DTN Cotton Open: Trades Higher in Rebound

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The cotton market is moderately higher Thursday morning as speculative selling seems to have exhausted itself. After experiencing a limit-down Monday, prices spiked even lower Tuesday night, before snapping up. Then, Wednesday saw technical consolidation among the futures, and so far Thursday, the market appears to want to trade higher, albeit timidly so.

Cotton is also being helped out by stronger outside markets, including grains and financials. USDA released its weekly sales and exports data Thursday morning. Superficially, the numbers appear to be a little disappointing.

The summary of the report is as follows:

Net sales of 226,900 bales for 2018/2019 were down 4% from the previous week, but up 8% from the prior four-week average. Increases were reported for Turkey (70,700), India (55,800), Vietnam (27,500), Indonesia (26,500), and Taiwan (10,400). For 2019/2020, net sales were 176,400 bales. Primary buyers were Indonesia (93,700), Vietnam (44,000), South Korea (13,100), Peru (5,700), and Thailand (5,700).

Weekly Exports were 362,800 bales. That amount was off 6% from the previous week, but up 9% from the prior four-week average. Shipments were to Vietnam (98,500), China (64,400), Turkey (48,500), India (37,700), and Pakistan (34,900).

Net sales of Pima totaling 8,200 bales which was up noticeably from the previous week, but down 17% from the prior four-week average. Increases were for Indonesia (4,100), Pakistan (2,100), and China (1,000).

Exports of 22,900 bales, up 38% weekly and 86% from the prior four-week average. Destinations were China (10,400), India (4,500), Vietnam (2,200), Peru (1,900), and Pakistan (1,800).

The spot July market enters this week down some 725 points, but as of Thursday, it is down almost another 200 points. Such is the oversold condition of the market that surely warrants a recovery rally into Friday. We will see if that can happen.

Close-in support for July cotton today is 65.85 cents, with resistance at 68.59 cents and 69.25 cents. Overnight estimated volume stands at 5,350 contracts.

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