The cotton market is higher Tuesday. Monday, USDA published its weekly crop condition data, and that information indicated the crop is sitting at 60% good/excellent, a four point improvement over last week. Additionally, this current good/excellent rating is up 21% over last year, and up 11% on the ten-year average.
The top two producing states, Texas and Georgia, stood at 58% and 60% good/excellent respectively. The number for Texas sounds especially significant.
The market’s hugely oversold condition has caused speculators to build a massive short position. In fact, managed money traders have saturated the trade with a record net-short position. While such a leaning to one side is not to be taken as an automatic buy signal, one wonders how long will it be before attitudes and sentiments began to shift towards the other direction.
The market continues to watch the situation unfolding in India. Besides the fact India cut 2019 cotton acreage some ten percent, much of the agricultural production is being negatively affected by delayed and sporadic monsoonal activity.
Already this year’s monsoons have deviated under India’s fifty-year average, placing the nation in a water crisis. Other potential troubled spots are Pakistan (desert locusts), and China (infestation of Fall Army Worms).
For today, close-in support for December cotton stands at 61.65 cents, with resistance at 64.00 cents and 64.70 cents. The estimated overnight volume is 3,300 contracts.