DTN Cotton Open: Market Consolidates Losses

Photo by Justin Ballew, Clemson University

After Thursday’s three percent fall in spot July cotton, the overall market is trading mixed. July has one more day of trading before it enters delivery on Monday. Open interest is greatly reduced, and will await to see what, if any, delivery notices are issued.

New crop December will face the all-important Planted Acres Report from USDA next Friday, plus the U.S.-China trade meeting is expected to occur as a sideshow to the G-20 Meeting in Japan. December Cotton enters Friday’s trade down 50 points on the week.

As of June 13, cumulative sales for 2019/2020 season stand at 25% versus the five-year average of 20.8% for this time of year. Sales of 199,000 bales are needed each week for the market to reach USDA’s forecast.

China sold some 9,400 tonnes of cotton from domestic inventories Thursday, and 9,100 tonnes Wednesday. That is the equivalent of nearly 50,000 bales for each day.

From the charts, it is apparent the cotton market is struggling. July’s deep plunge into contract lows is an especially negative development. It will take a lot of fancy footwork and luck to see the new crop hold the line and turn up. Hopefully, those aforementioned events will emerge in December Cotton’s favor.

For today, support for December cotton stands at 65.40 cents and 64.70 cents, with resistance at 67.50 cents and 68.20 cents. Overnight estimated volume is 6.564 contracts.

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