The cotton market continues to hold on to its gains from Monday after USDA reported the 2020 crop is becoming ragged around the edges. The weekly ratings data showed the nation’s 2020 cotton crop at 45% good/excellent, which was lower than last week’s level of 49%.
Additionally, at this time last year, the 2019 crop stood at 54% good/excellent. The ten-year average is 49% good/excellent. Texas’ top-end rating fell; the good/excellent rating of 31% last week gave way to Monday’s 25% good/excellent. In fact, six of the top seven producing states experienced declining conditions.
The 6-10 and 8-14 day forecasts still show prevailing hot-and-dry conditions for much of the U.S. cotton belt. In the timeline of crop development, August is a highly critical month.
The Indian Meteorological Department reported monsoon rains are expected to be 97% of a long-term average in August. The government defines average, or normal, rainfall as between 96% and 104% of a 50-year average of 88 centimeters for the entire four-month season beginning June.
Monsoon rains are critical for farm output and economic growth as about 55% of India’s arable land is rain-fed. The farm sector employs more than half of India’s 1.3 billion population and accounts for nearly 14% of the $2.9 trillion economy, Asia’s third biggest. Farmers plant cotton just ahead of the crucial rainy months of June and July, with harvest starting in October.
For Tuesday, support for December cotton lies at 62.60 cents and 61.60 cents, with close-in resistance at 64.14 cents and 65.00 cents. The current estimated volume is 3,835 contracts.