After several consecutive positive sessions, the cotton market is down Tuesday. Some of its selling is the result of producers hedging, while other selling relates to speculators taking profits. However, the bottom line is the Texas crop remains in steep trouble.
Just Monday, USDA reported the Lone Star crop was 36% very poor to poor. Although Monday’s data showed no worse, still to have the nation’s largest cotton state with nearly a third of its crop in such trouble is nothing to ignore.
In fact, the crop there may soon worsen, as future forecasts hold no rain and triple-digit temperatures. Overall, the U.S. crop slightly improved, going from 41% good to excellent to Monday’s 43%.
There were no deliveries for Spot July Cotton Tuesday. It expires Thursday, July 9, but with a standing open interest of 172 contracts, somebody had better make some fast decisions.
The current six to 10- and eight to 14-day forecasts show above normal temperatures and below normal rainfall fall for West Texas. However, to some degree that verbiage is a tad misleading as some areas will see above normal temperatures running as high as 106 degrees.
The last Commitment of Traders report showed speculators were net buyers across the cotton complex for the week ended June 30. Managed money speculators bought some 3,910 contracts, further increasing their net-long percentages.
For Tuesday, close-in support for December cotton stands at 62.20 cents and 61.50 cents, with resistance at 63.00 cents and 63.87 cents. Current estimated volume is 2,552 contracts.