Cotton Nervously Lower, Awaits Exports
The cotton market appears to be locked in supply and demand vise, which constricts its trading activity. That is, the bullish fundamentals of a smaller crop, disruptive storm, and strong exports are being offset by weaker global demand. To the latter, the UK has announced a deeper COVID-19 shutdown until March 2021. It’s expected the continent of Europe will follow in a similar way. In the U.S., certain medical experts are warning of a possible new COVID-19 resurgence during the fall and winter. Naturally, such social constraints will hamper retail shopping, and thus apparel demand.
Thursday morning, USDA will issue its latest export sales data. Last week saw a massive sales number. China was the dominant buyer of 400,000 bales. Analysts believe it’s trying to fulfill its phase-one obligation.
Traders continue to monitor certain weather events. Remnants of Beta are expected to come across portions of the Southeast, bringing clouds and rains. Of course, the desire for producers is for clear skies and hot temperatures so the crop will fully develop. The last crop condition report had the 2020 crop pegged at 45% good to excellent, equaling its level of the prior week. However, this Monday traders are likely to see a setback in those tabulations. The 10-year average for this time of year is 46% good to excellent.
For Wednesday, December cotton closed at 65.25 cents, down 0.29 cent, March closed at 66.14 cents, down 0.33 cent and December 2021 cotton finished at 65.85 cents, 0.10 cent lower. Estimated volume was 16,813 contracts.