DTN Cotton Open: Market Moves Up on Exports

Recently emerged cotton plants. Photo: Kevin Hudson, Mississippi State University

The cotton market is finding a way to trade higher Thursday even though it remains in a steep downtrend. However, the bearish trend itself has allowed the market to become grossly oversold. Ahead of the three-day Memorial Day Weekend, short-sold traders are apt to buy back their positions, taking in their profits.

Additionally, USDA reported better sales on its Thursday report. When both crop seasons are combined, some half-million bales were sold. A summary of that report follows for subscriber’s perusal.

Net sales of 381,400 RB for 2018/2019 were up 68% from the previous week and 80% from the prior 4-week average. Increases were reported for India (98,500), Turkey (93,200), Bangladesh (57,600), and Vietnam (50,900, including 24,600 RB switched from China). Other reductions were for China were 25,100 bales.

For 2019/2020, net sales of 241,500 RB were primarily for Vietnam (79,000), El Salvador (65,800), Honduras (21,100), China (19,800), and India (15,800). Exports of 348,600 bales were down 4% from the previous week, but up 3% from the prior 4-week average.

Exports were primarily to Vietnam (79,800), Pakistan (53,300), Turkey (46,300), China (42,200), and India (30,600). Net sales reductions of Pima totaling 2,100 RB were down noticeably from the previous week and from the prior 4-week average.

Increases primarily for India (400), Taiwan (400), Bangladesh (300), Germany (300), and Turkey (300), were partially offset by reductions for Indonesia (4,100). For 2019/2020, net sales of 4,500 bales were reported for Indonesia (4,100) and India (400).

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Exports of 13,000 bales were down 43% from the previous week and 15% from the prior 4-week average. The destinations were India (4,600), China (3,100), Vietnam (2,200), Peru (1,300), and Pakistan (1,000).

The market’s immediate reaction was to trade slightly higher. Weekend weather will be a key fundamental to watch. Currently, the Southeast is melting, the Delta remains inordinately wet and lags in its planting efforts, and Texas is always subject to a hailstorm or two. USDA’s planting progress numbers will be released next Tuesday.

For Thursday, support for December cotton lies at 65.85 cents and 65.25 cents, with resistance at 67.60 cents. Overnight estimated volume is 9,275 contracts.

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