This week saw the cotton market ignore the friendly news of worsening crop conditions to overemphasize the bearish news of poor sales and exports. The market is obviously disappointed that better sales are not being generated on lower prices. When crop seasons are combined, the total number was about 164,500 bales compared to one week ago, when the sales were over 330,000 bales.
Simplistically, if cotton demand were globally strong, these lower prices levels would reflect it. Of course, as of August 15 cumulative sales stand at 49.5% of USDA’s forecast for the current marketing year versus the five year average of 42.5%. As impressive as this sounds, remember sales can always be rolled, or worse, cancelled.
For now, the market remains in a consolation pattern as bullish traders lack conviction to buy, and bearish traders are saturated short to their proverbial gills. December cotton enters the trading session today down 100 points on the week, and 160 points on the month.
Six trading sessions remain until the end-of-the-month and the Labor Day holiday for the market to improve its lot. Soon after, harvest will commerce and bring to the market the very thing it doesn’t need at least for the moment, more cotton.
For today, support for December cotton stands at 58.50 cents and 57.55 cents, while resistance is at 60.05 cents and 60.50 cents. Overnight estimate volume traded is 7,170 contracts.