DTN Cotton Open: Market Offers Small Rebound

Cotton in bloom. ©Debra L Ferguson

The cotton market is trading slightly higher, but still suffers from the hangover of Wednesday’s unexpected bearish crop report. Essentially, traders were looking for a reduction in the 2020 crop to 17.02 million bales, but USDA increased the crop back up to 18.08 million bales.

The question among traders and hedgers is how can fewer acres, with adverse weather, be able to show increased yields?

Thursday morning USDA also issued its weekly export sales data. It included a lot of numbers as the agency mathematically blended the old crop “shavings” into the new crop trade. The details are present below as USDA published them.

Net sales for 2020/2021, which began August 1, totaled 6,900 RB. Increases reported for Pakistan (10,100 RB, including decreases of 300 RB), Indonesia (7,500 RB, including 6,600 RB switched from the Philippines, 100 RB switched from Japan, and decreases of 100 RB), Vietnam (6,200 RB, including 1,300 RB switched from South Korea), Turkey (5,900 RB), and Japan (3,400 RB), were offset by reductions primarily for China (21,500 RB), the Philippines (6,600 RB), and El Salvador (1,200 RB).

A total of 2,883,200 RB in sales were carried over from the 2019/2020 marketing year, which ended July 31. Exports for the period ending July 31 of 43,600 RB brought accumulated exports to 14,174,500 RB, up 8 percent from the prior years’ total of 13,158,900 RB.

The destinations were primarily China (19,500 RB), Vietnam (13,800 RB), Bangladesh (2,300 RB), Peru (1,400 RB), and Thailand (1,300 RB).

Exports for August 1 — 6 totaled 278,600 RB, with China (157,100 RB), Vietnam (56,300 RB), Turkey (13,700 RB), Pakistan (11,700 RB), and Bangladesh (9,600 RB) being the primary destinations. Net sales of Pima for 2020/2021totaled 10,400 RB.

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Increases were primarily for China (6,200 RB), Bangladesh (1,700 RB), India (900 RB), Vietnam (900 RB), and Pakistan (600 RB).

A total of 116,400 RB in sales were carried over from the 2019/2020 marketing year, which ended July 31. Exports for the period ending July 31 of 3,700 RB brought accumulated exports to 486,600 RB, down 25 percent from the prior years’ total of 644,800 RB.

The destinations were primarily Pakistan (1,400 RB), Vietnam (900 RB), India (700 RB), China (400 RB), and Greece (200 RB). Exports for August 1 — 6 totaled 5,600 RB, with China (2,500 RB), Peru (1,200 RB), Vietnam (900 RB), Pakistan (900 RB) and Turkey (200 RB) being the primary destinations.

Sometime tomorrow, or into the weekend, the U.S. and China are expected to review the Phase One trade deal. Given the strained relations between the two nations, there may be some serious jawboning, but China’s actions will be the thing to watch. Thus far, there has been a ton of public fussing, while conducting a ton of private buying.

For Thursday, support for December lies at 62.00 cents and 60.00 cents, with resistance at 64.00 cents and 65.05 cents. The current estimated volume is 5,367 contracts.

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