With the meltdown in the financial markets at least not as dynamic as Monday, the cotton market is finding the ability to trade slightly higher. Speculators continue to nip away at the long side of the market given its upward trend, as well as the possibility of weather disruptions.
To the latter, there is suddenly a tropical disturbance right off southern Florida, which appears likely to enter the Gulf of Mexico. It may not have enough time to form into something huge, but nonetheless, it could still bring copious amounts of rain over the U.S. Delta and Southeast.
Currently, the Houston area is dealing with Beta, which is dumping 10-plus inches of rain. Winds and rain remnants are expected to run across the Delta and up into the Tennessee Valley.
USDA issued its weekly crop condition report Monday afternoon. As it stands, the 2020 crop is rated 45% good/excellent, equal to last week’s rating. One year ago, the crop was 39% good/excellent and the 10-year average of 46% good/excellent.
Ongoing financial and political turmoil has given the U.S. dollar a new bullish life. On Monday the dollar hit a two-month high as currency traders are selling their weaker currency holding and are flocking to the dollar. The new COVID restrictions in Great Britain, along with a virus resurgence on the continent, have pushed traders back to the dollar.
On Thursday, USDA will publish its weekly export sales. Last week saw stupendous sales of 519,000 bales, with 400,000 sold to China. Unfortunately, during these unsettling times, that friendly data had little positive effect on the market.
For Tuesday, intermediate support for December Cotton is 64.50 cents with overhead resistance at 66.70 cents. The current estimated volume is 7,525 contracts.