Despite its tug-of-war fundamentals, December cotton continues to grind higher. Currently, the 2020 crop is reeling from several weather events. Early on there was Hurricane Hannah, which invaded the Texas Valley area, punishing the Rio Grande cotton crop.
Hannah was followed by Category Four Hurricane Laura, which hit the east Texas/Louisiana area bringing fierce winds and rains to those cotton areas. Next, the Delta and Southeast endured Hurricane Sally which, although not as intense, poured her rains across more cotton locations.
Now, the remnants of Tropical Storm Beta are heavily raining across Tennessee and the Atlantic states. Summarily, traders believe the 2020 crop is smaller, and diminishing daily.
Cumulative sales have reached 7.722 million bales versus the 8.40 million bales sold at this same time last year. In 2018 some 88.890 million were sold by this time. The five-year is 6.450 million bales. In percentage terms, current season sales are 57% of USDA’s forecast versus the five-year average of 48%.
The U.S. dollar continues to push higher. Global currency speculators are buying the dollar as a safe haven trade. The resurgence of COVID-19 in such areas as the UK and the European Union have definitely caused their currencies to lose their investment appeal.
For Friday, support for December cotton is 64.50 cents and 64.10 cents, with overhead resistance at 66.25 cents and 67.00 cents. The current estimated volume is 4,750 contracts.