DTN Cotton Open: Market Lower as Harvest Begins

Photo: Nick McMichen

The cotton market is lower Tuesday morning perhaps as a function of Turnaround Tuesday; on any given Tuesday, the market will typically trade opposite to its action of the preceding Monday.

USDA reported the condition of the crop has waned a bit more. The national crop stands at 41% good/excellent, compared to last week’s 43% good/excellent, versus the five-year average of 39%. At its peak from, the 2019 crop was 61% good/excellent. Texas stands at 31% good/excellent, and Georgia is at 57% good/excellent.

Some analysts believe the crop is in worse shape than previously thought, however that evidence will be obvious once harvest gets a full head of steam. Current harvest numbers have the crop 9% gathered versus last season’s 13%, and the five-year average of 8% complete.

Traders are indeed watching the development of the Saudi oil attacks. While the U.S. is not as dependent on Middle Eastern oil as it once was, the volatility the attacks unleashed can upset many markets.

On Thursday, USDA will issue its normal weekly sales and exports data. Last week’s report was bearish as the current crop sales tallied a mere 74,000 bales. In that, China was a net canceler of 20,000 bales.

The most recent commitment-of-traders data shows less of a bearish position held by managed money funds. At their peak, speculators held some 49,000 net short contracts, but current data has them holding 32,000 net short contacts. However, that number still represent some 3.20 million bales of cotton.

For today, support for December cotton stands at 60.80 cents and 60.00 cents, with resistance at 63.90. Overnight estimated volume stands at 4,953 contracts.

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