DTN Cotton Open: Market Up, Weather, Down

Irrigation pivot in cotton field. Photo: Kay Ledbetter, Texas AgriLife Extension

The cotton market is starting its first full week of July with higher prices. With fewer 2020 planted acres, coupled with current hot-and-dry Texas weather, buyers are beginning to wade in the trade. Still, the next 24 hours do offer some potential rain to fall across some Texas areas. Afterwards, the weather maps suggest its unmercifully hot and dry for the next two weeks.

Helping to push the cotton market higher Monday is a surging Dow Jones. Last week saw a massive jobs data report, which exceeded all analyst’s expectations. So while infections are on the rise, so too is the U.S. economy trying to wake up from its COVID-19 slumber.

Additionally, Chinese stock markets are also higher, indicating the economic rebound is for real. However, China is facing tremendous geopolitical pushback from many of the world’s nations. Governments are upset over China originating the coronavirus, her strong-arm takeover of Hong Kong, and her deep military reach into the South China Sea.

Monday at 4 p.m. ET, USDA will issue its latest crop conduction data. Last week, the Texas crop was 36% very poor to poor. It is expected that the crop will show further deterioration Monday. A low pressure continues to pound the southeastern Coast will copious amounts of rain. On the whole, it is generally thought, the south crop is benefiting.

There were zero deliveries Monday against the Spot July contract. To date, there have been 307 notices issued. July’s open interest is down to 172 contracts, with expiration this Wednesday.

For Monday, close-in support for December cotton lies at 61.50 cents and 61.10 cents, with resistance at 63.70 cents and 64.40 cent. Current estimated volume is 3,334 contracts traded.

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