Cotton is sharply lower Tuesday morning as improving crop conditions, a negative technical trend, and improving weather have ganged-up on the market.
Monday, USDA reported the nation’s crop stands at 54% good/excellent, up 2% from last week. In fact, the current good/excellent ratings are 13% higher than last year at this time and up 5% on the 10-year average. To that end, Texas is showing 48%, up 4% week-over-week, while Georgia stands at 60%, up 2%
Tuesday morning, the market posted a new low for the move, solidifying its bearish trend. The June low of 64.70 cents was breached, and sell-stops were touched off. Given speculators are in the driver’s seat, holding a record net-short position, any sort of bullish recovery doesn’t seem likely any time soon.
Weather-wise, conditions seem to be improving especially for west Texas. Over the weekend, Texas received rain where it was needed, and warmer temperatures are rising for better crop development. In fact, much of the Cotton Belt is experiencing beneficial weather conditions of hot and wet.
For today support for December is not established, given the market has posted life-of-contract lows this morning. Resistance will be at 65.95 cents and 67.25 cents. Overnight estimated volume stands at 17,600 contracts.