DTN Cotton Open: Elevated on Oversold Conditions

Photo: University of Tennessee

The cotton market is slightly higher Tuesday morning on its steep oversold conditions. The market is hovering at three-year lows as speculators have pounded prices over the past many weeks. In fact, so tenacious has been the selling, the speculators are a record net-short. To that end, Tuesday morning’s slight recovery may be a function of a Turnaround Tuesday event.

Monday saw USDA sharply increase the 2019 crop by some 500,000 bales, while surprisingly also increasing export potential. The export category was raised some 200,000 bales to stand at 17.20 million. That target seems a tall order given the on-going trade dispute with China. World ending stocks jumped to 82.45 million bales, solely on the back of the U.S. data.

Monday afternoon’s crop condition data shows the nation’s crop at 56% good/excellent up from last week’s 54%. Texas stands at 52% good/excellent, with number two Georgia at 57% good/excellent.

Although the USDA crop news is considered bearish, Texas is in dire need of rain. In fact, many cotton locales have such a need. There are some scattered chances into this weekend, but if those rains fail to materialize, then the market may feel the need to adjust upwards

Today, support for December cotton is 57.55 cents and 57.25 cents, with resistance at 59.00 cents and 59.45 cents. Overnight estimated volume is 4,580 contracts.

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