December Cotton settled lower Friday, leaving the new crop market up only 0.24 cent for the week. This week saw improving field conditions across the Southeast, weaker weekly sales and a stronger U.S. dollar. The dollar traded higher as Mideastern geopolitical tensions heightened with the attack on two civilian oil tankers in the Arabian Gulf.
Still, the market is waiting on the end-of-the-month planted acres number from USDA, and the events of the G-20 meeting on June 28-29. It will be interesting to see the government view the new crop’s planted acres given many weather adversities which has gripped the nation. As for the G-20, supposedly Presidents Trump and Xi are scheduled to meet to hopefully restart the stalled U.S.-China trade talks.
The trend of the cotton market remains steeply bearish and thus severely oversold. To that end, speculators continue to hold a hefty net short position. There are only two ways for the market to work off such a technical situation. One is to see prices snap-up sharply higher, while the other is for it drag along sideways. From the looks of the charts it seems like sideways is the path of least resistance.
Next week, besides the usual crop condition/progress on Monday, and weekly sales and exports on Thursday, Friday is the last day before July’s cotton delivery. All on-call cotton will be fixed by that time, one of those producers remaining will be involved in the delivery process.
July cotton settled 66.00 cents, down 0.83 cent, December closed at 65.75 cents, off 0.68 cent and March ended at 66.38 cents, down 0.62 cent. Estimated volume was 36,500 contracts traded.