DTN Cotton Open: Lower on Technical Follow-Through

Mature cotton rows ready for harvest. ©Debra L Ferguson

The cotton market is lower Tuesday morning after Monday’s poor technical showing. That is, after starting Monday with a full head of bullish steam, the market sputtered and coughed its way to a lower close. Then Tuesday morning, in an even more nervous contraction, it is materially lower as nervous speculators are leaking out of some long positions.

Subscribers will remember the CFTC just reported on Friday certain managed-money speculators had swelled their net long holdings to 51,000 plus contracts.

In its weekly crop condition and progress data, USDA reported the 2020 crop stands at 43% good/excellent versus last week’s 45% good/excellent. Additionally, the report indicated bolls open were at 66%, right on the five-year average, but below the 73% open level of last year.

The 6-10 day forecast has temperatures well below normal across the Southeast, but the thermometer does moderate a bit in the 8-14 day outlook. After this week, rainfall is expected to be below normal for the U.S. Delta and the Southeast.

No doubt Tuesday night’s presidential debate may dial up some unexpected volatility for the financial and commodity markets. Such nervousness could spill over into the cotton trade. Also, to reiterate from yesterday, Wednesday marks the end of the month, and the end of the quarter. Often such calendar intervals can result in exaggerated moves in the markets, especially cotton.

Tuesday’s support for December cotton is 64.70 cents and 63.40 cents, with overhead resistance at 66.60 cents and 67.00 cents. The current estimated volume is 7,250 contracts.

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