DTN Cotton Open: Higher on Crop Stress

Cotton loaded with bolls. Photo: Jerry Stuckey

The cotton market is starting the month of August with sharply higher overnight trade. August is a crucial time for crop development, particularly for West Texas. Of course, Texas has been suffering hot and dry conditions since spring, yet that adversity intensified during July.

Now, it appears the Southeast, or huge pockets of the Southeast, are unduly suffering from lack of rain. At one time it was hoped Hurricane Isaias might roll into the Gulf of Mexico, and possibly come up into the Alabama/Georgia area with saving rains. However, the NHC has the storm hitting the East Coast all the way to New England.

Monday afternoon USDA will issue its latest crop condition data. Last week was something of a double-take as Texas had an 11-point improvement in very poor to poor levels. However, traders expect Texas to show a worsening situation Monday afternoon.

To that end, the 6-10 and 8-14 day indicated hot and dry weather returning to West Texas, but also having that weather extending into the Delta and the Southeast.

Friday afternoon, the CFTC data indicated managed money speculators were net sellers of some 47,00 contracts last week. Still, they retained a net long position of 25,635 contracts.

The U.S. dollar is higher Monday morning after being beaten-up for most of the month of July. The inability of the U.S. to firmly contain COVID-19, and sagging polls for President Trump, has some currency traders doubling the U.S. dollar’s future vitality.

For Monday, close-in support for December cotton is 62.27 cents and 61.90 cents, with resistance at 64.25 cents and 64.50 cents. The current estimated volume stands at 5,345 contracts.

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