DTN Cotton Open: Up, Anticipates USDA Data

Photo: Fred Miller, University of Arkansas

The cotton market is awaiting USDA’s August Supply-Demand Report due at 12:00 p.m. EDT Wednesday. Industry analysts are looking for reduced domestic production with increased exports, but higher global carryout. Numbers-wise, today’s average estimate for the 2020 crop is 17.20 million bales, down from 300,000 bales from the July data.

Of course, if that math is correct then U.S. carry will slip to 6.30 million bales, down from July’s 6.80 million bale number. However, because of the shuttering of the global economy to combat COVID-19, global ending stocks are expected to rise from 102.77 to 103.30 million bales.

After the crop data is revealed Wednesday, two additional events remain for the cotton market to consider this week. One is the normal weekly export sales data at 8:30 a.m. EDT Thursday morning. Traders hope to see mathematical evidence of unshipped old crop purchase being rolled into the new crop season for eventual fulfillment.

The other is the U.S.-China teleconference review of the Phase One trade treaty. Comments in the past form the Chinese have stated their support for the deal, although China is lagging in required purchases. From the U.S. side there is some optimism, but also a cautionary feeling as well. That meeting reportedly happens on Friday or into the weekend.

For Wednesday, support for December cotton stands at 62.00 cents and 60.80 cents, with resistance at 65.05 cents and 65.95 cents. The current estimated volume is 3,518 contracts.

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