Cotton Seesaws Over Weather
The cotton market was initially higher Monday morning, but then finished lower as some weather forecasts called for clearing skies. For several weeks, different storms, with different intensities, have been rampaging over the southern cotton crop. In fact, we had one subscriber who was getting rain at the time of our conversation, tell us that he had lost track of which weather event his rain originated. At any rate, the cool, damp and cloudy weather has been assailing much of the 2020 crop to the point that quantity and quality concerns have heightened. However, there now seems to be a break in that situation. The six- to 10-day and the eight- to 14-day outlooks call for below normal rainfall as well as below normal temperatures.
Monday afternoon, USDA will update its latest condition data. For the past two weeks the nation’s top good-to-excellent rating has held steady at 45%. Yet, given the adversity, the crop has likely gone backwards.
Another potential negative for the market is the growing net long position held by managed-money speculators. Last Friday, the CFTC reported those funds held some 51,300 plus contracts, which is the equivalent of 5.13 million bales. Sounds like a huge position to carry for those who don’t know cotton from cotton candy!
Wednesday marks the end of the month, as well as the end of the quarter. To that point, such calendar intervals often cause speculative funds to do “wonky” things with their trading positions. So be aware!
For Monday, December cotton closed at 65.69 cents, down 0.29 cent, March closed at 65.87 cents, down 0.17 cent and December cotton ended at 66.38 cents, down 0.28 cent. Estimated volume was 25,359 contracts.