The market is higher after USDA’s condition data showed the development of the crop is slowing. Overall, the U.S. crop stands at 43% good/excellent, lower than last week’s 48% good/excellent. Moreover, the poor/very poor categories were up 3% to 18%. The worst hit states were Texas at 22%, Alabama at 18%, North Carolina at 23% and Missouri at 19%, all poor/very poor.
All eyes are on Thursday’s supply-demand report. Current industry estimates average out at 16.78 million bales. This number is down from the August report of 22.50 million bales. Ending stocks are expected to ease to 7.14 million from the previous 7.2 million. This tiny reduction suggests the government will whack the potential for exports as well.
As of August 29, cumulative cotton sales are 51.5% of USDA’s forecast for the season. This number compares to the five-year average of 45.4%.
Bearish funds are likely leaking out of the market. At their peak there were record net-short some 49,000 contacts, or 4.90 million bales. Currently, it is estimated they are now short some 39,000 contacts. To that end, a strong supply-demand data might encourage further buying from speculators and thus a rise in price.
For today, support for December cotton stands at 58.45 cents, with resistance hovering at 59.70 cents and 60.65 cents. Overnight estimated volume is 2,249 contracts traded.