DTN Cotton Open: Market Mired Down, Desperate For Direction

Photo: Clemson University Public Service and Agriculture

As the morning started, cotton was essentially unchanged from its close of last Friday. From the Sunday night opening to Monday morning’s early light, prices are tight and volume is slow.

Of course, the market needs and is seeking direction. As it stands, the crop looks huge, and demand looks weak. To that end, this Thursday USDA will issue its September Supply-Demand Report. Some traders expect the crop to be reduced, along with ending stocks. But if USDA also pares its exports outlook, which was considered lofty by some traders, monthly carryout may not change that much.

Monday afternoon, USDA will release its weekly crop condition data. The peak time for the season occurred in late July when the 2019 crop was ranked nationally at 61% good/excellent. From that point, the crop was beset with weather troubles, and many traders now believe the crop has shrunk is size and scope due to that.

Also Thursday, the government will publish another round of weekly export sales. This week should reflect the time when the new crop market traded under the 58-cent mark. If such low prices cannot generate improved business, then what will?

Cumulative net sales as of August 29 stand at 51.4% of USDA’s foretasted target for the current marketing year versus the five-year average of 45%.

An emerging positive tilt to the market may be the sorry state of India’s 2019 crop. Currently, analysts estimate it to be the smallest since 2011. India has endured troubles this season with sporadic monsoons. Mostly, monsoons have varied from too much to too little to too late. India may have to import some two million bales of cotton to cover her shortfall.

For today, support for December cotton stands at 56.55 cents and 57.25 cents, with resistance at 59.86 cents and 60.25 cents. Overnight estimated volume is 2,177 contracts.

  • Keith Brown can be reached at commodityconsults@gmail.com or by calling (229) 890-7780.

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