Cotton Higher, Encouraged by Grains
The cotton market ended Wednesday moderately higher, spurred on by friendly outside grain markets. Wednesday USDA released its quarterly grain inventories and they were something of a bullish shocker. Year over year corn stocks had dropped 10%, while soybeans fell 42%. Immediately, both corn and beans shot higher and with that, cotton thought “why not?” Thus December cotton charged above 66 cents, but closed slightly off that level. Of course, given Wednesday is the end-of-the-month, as well as end-of-the-quarter, there may have been some speculators squaring their positions to their liking.
Thursday, USDA will publish weekly exports sales in the morning Seasonally, sales for the current crop year are running ahead of the government’s forecasted expectations.
India says its monsoons were 9% above-average for the second consecutive year. However, heavy summer downpours have damaged some crops that are close to being gathered such as cotton, rice and soybeans. Yet, India is nursing a record cotton crop. Those rains have put India water levels in its main reservoirs at 93% of their storage capacity. The 10-year average is 79% according to government tabulators.
The India Meteorological Department indicated the rarity for the country to experience back-to-back above average rainfalls. The last of such an occurrence was in 1958 and 1959. The monsoon delivers about 70% of India’s annual rainfall. They generally commence in June and end late September.
For Wednesday, December cotton closed at 65.79 cents, up 0.50 cent, March closed at 66.54 cents, up 0.51 cent and December cotton ended at 65.84 cents, up 0.26 cent. Estimated volume was 19,908 contracts.