DTN Cotton Open: Trades Two-sided, Assesses Sally

Cotton harvest. ©Debra L Ferguson

The cotton market is trading both sides of unchanged Thursday morning as it tries to get a handle on what damage, or lack thereof, was done to the southeastern cotton crop by Hurricane Sally. Reputably, south Alabama received some 20 inches of rain in a short span of time, and Sally isn’t over yet. She is moving into the Carolinas and Virginia, still very powerful.

USDA reported huge sales this morning, with China as the dominant customer. Here is the summary of that business off the government’s website:

Net sales of 519,600 RB for 2020/2021 were up notic\eably from the previous week and from the prior 4-week average. Increases primarily for China (440,100 RB, including 1,500 RB switched from Taiwan and decreases of 2,300 RB), Mexico (20,000 RB), Pakistan (17,600 RB), Vietnam (11,300 RB, including 1,300 RB switched from South Korea), and Turkey (7,800 RB), were offset by reductions for Japan (1,100 RB) and South Korea (500 RB).

Exports of 187,900 RB were down 19 percent from the previous week and 38 percent from the prior 4-week average. Exports were primarily to China (95,800 RB), Vietnam (26,200 RB), Indonesia (15,300 RB), Mexico (11,600 RB), and Bangladesh (7,300 RB). Net sales of Pima totaling 28,000 RB were up 61 percent from the previous week and 75 percent from the prior 4-week average.

Increases were primarily for China (12,600 RB), India (7,600 RB), Vietnam (5,800 RB, including 200 RB switched from Japan), Pakistan (700 RB), and Greece (500 RB), were offset by reductions for Japan (200 RB).

Exports of 16,500 RB were up 54 percent from the previous week and 59 percent from the prior 4-week average. The primary destinations were Vietnam (6,700 RB), China (4,000 RB), Bangladesh (1,700 RB), India (1,300 RB), and Pakistan (1,000 RB).

Wednesday the Federal Reserve announced it would keep U.S. interest rates at virtually zero until 2023. The move, widely expected, has still confounded the U.S. dollar, trading on both sides of unchanged. Additionally, the talk of new stimulus coming from the White House is falling on deaf ears with Congress.

There was also a decline in August retail sales suggesting the county is slow to shed the COVID-19 curse. Clothing sales at retail outlets had gained 2.9% from July but remained 20% below the levels seen in February.

For Thursday, close-in support for December Cotton lies at 66.00 cents and 65.50 cents, with resistance at 67.00 cents and 67.60 cents. The current estimated volume is 3,740 contracts.

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