DTN Cotton Open: Market Trades Nervously

Pivot irrigation in Texas cotton near Lubbock. Photo: Larry Stalcup, AgFax Media

The cotton market is trading both sides of its Friday close as it has one eye on the volatile Dow Jones and the other on Tuesday’s monthly supply-demand data from USDA. The Dow’s jitters stem from its fears over the re-opening of the U.S. economy, because if it happens too soon, a second surge of the coronavirus could occur.

As far as the May supply-demand report, there are several big questions USDA could address in terms of production and consumption affected by the global slowdown.

April saw the U.S. crop unchanged at 19.80 million bales, with exports falling to 15.0 million bales. Domestic carryout was 6.70. In world data, Chinese consumption dropped some 1.50 million bales, which in turn hiked global carryout to 91.25 million bales.

The CFTC released its commitment-of-traders report last Friday. The data indicated managed money speculators were net buyers of 1,100 contracts, which supposedly reduced their net short position to some 19,000 contracts.

Monday afternoon at 4 p.m. EDT, USDA will report on the planting progress of the 2020 crop. Judging from history and current weather conditions, 2020 plantings ought to be in line with the historical pace.

For Monday, close-in support for July cotton is 54.00 cents, with resistance at 58.00 cents and 60.75 cents. Current estimated volume is 2,605 contracts.

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