The cotton market is seeing follow-through buying Wednesday morning as traders are rethinking their position in light of Tuesday’s lower acres data. USDA issued its all-cotton acres for 2020 at 12.20 million, well below the 13.17 average estimate, and last March’s intentions of 13.70 million.
With acres now out, traders will focus on weather and field conditions. As it stands, the 6-10 and 8-14 day forecasts are calling for above normal temperatures and below normal rainfall for much of West and Panhandle Texas. The next two-week’s crop condition numbers will be of keen interest to traders.
To the negative side, the market is still facing potential demand setbacks from Covid-19. As infections seem to be on the rise, some states are slowing their re-openings while others are contemplating complete shutdowns. Such reactions can hurt retail apparel demand.
Thursday, USDA will issue its latest export sales data. While current season sales are well above USDA’s original projections, the market needs to see demand, and spread-out demand at that, from its many world customers. If not, then the possibility of future cancellations run high.
July cotton saw zero deliveries Wednesday. With an open interest of 210 contracts, and expiration in four trading days, the last old crop contract will quietly fade away.
The market is closed on Friday for the July Fourth holiday. The Labor Depart will release its monthly jobs data Thursday morning. Cotton trading will resume at its normal trading time of 9 p.m. EDT Sunday night.