The cotton market is trading lower Wednesday as weaker foreign currencies are catapulting the dollar higher. A stronger dollar is seen as a detriment to U.S. exports. The dollar’s newfound strength lies in the apparent resurgence of COVID-19 in Great Britain and the European Union. The UK has just announced additional social restrictions, and Europe may soon follow.
India is now projecting a larger crop as monsoonal activity was plentiful and timely. Indian agricultural officials are now forecasting a domestic crop of 37 million U.S. size bales. This number compares to USDA’s most recent crop assessment of 30 million, up from 2019’s 29.50 million.
Traders are also mindful of several U.S. weather events potentially hurting the 2020 crop. Damage assessments from Hurricane Sally are slow to emerge, and now rains from Tropical Storm Beta will likely punish production across the U.S. Delta and the Southeast. In addition, the National Hurricane Center is monitoring a tropical disturbance hovering right off the Gulf side of the Florida coast. It has yet to be determined if this swirl will form into anything serious.
For Wednesday, intermediate support for December Cotton is 64.50 cents, with overhead resistance at 66.70 cents. The current estimated volume is 7,525 contracts.