DTN Cotton Open: Market Attempts to Stabilize

Cotton field ready for harvest. ©Debra L Ferguson

The cotton market is slightly higher Tuesday morning as it is digging in to avoid further losses. Subscribers will remember the massive bearish decline of last Friday when so many technical influences came together to break the market.

Those events included an overbought position held by speculators, as well as a historical tendency for December cotton to post an August seasonal high. This week there will be several reports out to either support or offer resistance to the market.

Monday, USDA issued its crop condition data and its findings indicate the 2020 crop is worsening. The national crop was rated 42% good/excellent compared to last week’s 45% god/excellent. Texas was lowered from last week’s 25% good/excellent to the present 22% level.

Looking ahead, the cotton market will face new supply-demand numbers Wednesday at 12:00 p.m. EDT, then Thursday’s weekly export sales. Lastly, U.S. and Chinese negotiators are scheduled to meet via a teleconference during the weekend to review the details of the Phase One trade deal.

Also, the cotton market is witnessing the Dow Jones pushed towards its all-time January high of 29,543. Ultimately a new high for the Dow would be seen as a peripheral positive for all markets.

For Tuesday, support for December cotton is 62.00 cents and 61.00 cents, with resistance at 63.55 cents and 65.05 cents. The current estimated volume is 2,707 contracts.

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