After a strong up week, culminating in new highs for the move, the cotton market is setting back Monday. Naturally, the recent up move has drawn in speculators, whom, as of last Friday, had increased their net long position to over 21,000-plus contracts. That action has created a slightly overbought situation. Hence, a setback on a Monday seems normal.
Monday afternoon USDA will publish its crop condition numbers, and, of course, the market is in search of something more bullish than before. Therefore, Texas needs to at least pop above the 40% very poor to poor ratings. Last week Texas was rated at 36% very poor to poor.
The latest weather forecast still calls for above normal temperatures for part of West Texas during the period of July 18 through July 22. At the same time, the predictive outlooks show no sign of rain.
Traders are also awaiting the results of this week’s OPEC. OPEC+ has collectively reduced daily crude production by some 7 million barrels per day in order to bid up prices. Of course, the global slowdown due to COVID-19 is making a major impact on supply and use. Crude oil is the main ingredient in the production of synthetic fibers, the opposite of cotton, which is the natural fiber.
For Monday, December cotton closed at 63.35 cents, down 0.96 cent, March finished at 64.04 cents, down 0.79 cent and December 2021 went out at 63.85 cents, down 0.19 cent. Estimated volume was 15,715 contracts.