It has been a harsh week for the cotton market. Three of its five sessions saw new life-of-contract lows posted. Even worse was December cotton’s weekly net change, which was a terrible 4.14-cent lower close. Heavy speculator selling emerged against a backdrop of decent domestic weather and poor export-sales. Government complied data (the CFTC) already suggests this group was record net-short even before this week began.
Fundamentally, the U.S. crop is looking robust. Last week’s ratings had it 54% good to excellent. That rating was up 13% over the same time last year and 5 % higher on the 10-year average. Monday afternoon, USDA will issue a new set of condition numbers. Whatever damage Hurricane Barry inflicts on the Delta crop will not appear in that report.
This week’s domestic supply-demand numbers primarily reflected higher beginning stocks resulting in higher ending stocks. Also a reported slowdown in domestic spinning activity of 100,000 bales resulted in less domestic consumption. The world numbers also reflected higher beginning stocks as a result of less consumption from Bangladesh and China for the 2018-19 season. Also, for the new crop, world consumption was reduced as lower estimate for China and Bangladesh more than offset India improved mill use.
Next week the Federal Reserve will meet on Tuesday and take actions, or not, on Wednesday regarding interest rates. Whatever its action, the U.S. dollar may be affected.
Friday, December cotton closed at 62.68 cents down 0.40 cent. For the week, December settled down 4.14 cents. March cotton ended at 63.74 cents, off 0.46 cent and December 2020 closed at 65.56 cents, down 0.48 cent. Estimated volume was 19,990 contracts.