The cotton market is slightly higher Monday morning after Friday’s harsh fall. Seemingly out of nowhere, the market was bearishly hit as traders and hedgers sold into the market, sending prices to near limit-down levels.
The feeling was so much of the adverse weather had been dialed in, and fresh news indicating Chinese and U.S. negotiators would revisit the Phase One trade deal late this week, causing the market to nervously sell off. Still there are other reports out this week to either help or hinder the trade.
Monday afternoon, USDA will issue its weekly crop condition report. Monday’s data is expected to show more deterioration to the 2020 crop. Then on Wednesday at 12:00 p.m. EDT, USDA will issue its monthly supply-demand numbers. Traders are wanting to see a deep reduction in yield.
On Thursday, weekly sales and exports will be out, and the hope is most of the unshipped old crop cotton sales will be rolled over into the new crop for eventual exportation.
The 6-10 day and 8-14 day weather outlooks still call for above normal temperatures and below normal rainfall for much of the cotton belt.
Additionally, managed money speculators were net buyers of some 5,700 contracts for the week ending August 4 (a Tuesday). That action brought their total long position to 31,335 contracts. Now, one wonders if some of those late buyers are now trapped?
For Monday, close-in support for December cotton lies at 62.00 cents and 60.30 cents, with resistance at 63.20 cents and 63.75 cents. The current estimated volume is 5,705 contracts.