Cotton finished moderately higher Wednesday as short-sold speculators, and bullish bottom pickers emerged to shoot prices higher. Volume was not strong, which suggests Wednesday’s action was more about position adjusting than the belief an absolute low has been found. To that end, the speculator remains record net short and the trend of cotton is decidedly bearish.
Thursday USDA will issue both weekly sales and exports data and its monthly supply demand report. For supply demand, the industry average guess stands at 21.86 million bales within a range of 21.5 to 22.3 million bales versus the June report. Domestic carryout is anticipated to be 6.53 million bales, compared to June’s ending stocks number of 6.40 million.
In the coming weeks it will take different and friendlier fundamentals to bring the market up, and out from its current price basement. Although the U.S. Crop is rated better than 50% good to excellent, there are growing concerns that the foreign crop is weakening. India has a water crisis, China has infestation of the fall armyworms and Pakistan is plagued with locust swarms. Additionally, China continues to auction off its domestic stocks. While those auctions are embraced as a short-term negative, they are also thought to be long-term friendly.
December cotton settled at 63.82 cents, up 0.54 cent, March finished at 65.06 cents, up 0.39 cent and December 2020 cotton was at 66.80 cents, up 0.04 cent. Estimated volume was 26,300 contracts.