DTN Cotton Open: Market Ricochets Higher Off Technicals

    Coosa, Georgia, cotton field ready for harvest. Photo: Nick McMichen

    After two hard down days, the market held trend-line support and recovered half its losses of Tuesday, encouraging bullish traders to stand their ground Wednesday. Of course, there has been some slowness to the harvest with all the recent weather events causing some flooding.

    To that end, there is another tropical disturbance below Cuba. It may, or possibly not, develop into anything serious, but during this time of year, all potential patterns should be monitored.

    The six-to-10 and eight-to-14 day forecasts call for below normal participation, and cooler temperatures across the U.S. southern cotton belt. Farmers should be quickly gearing up to apply defoliants to their fields, and soon their harvesting equipment will be running.

    China’s Xinjiang Province is reporting a bumper crop. Whether true or hype remains to be seen. However, a huge Chinese crop could reduce their need to import as much foreign cotton as traders originally thought.

    At 8:30 a.m. CT on Thursday, USDA will publish its weekly Export Sales report. Hopefully, the data will show an uptick in sales and continued strong shipments. To that end, of late the U.S. dollar has posted a two-month high, so it will be interesting to see if its rise has dampened U.S. sales.

    Wednesday’s close-in support for December cotton is 64.70 cents and 64.20 cents, with overhead resistance at 66.60 cents and 67 cents. The current estimated volume is 3,250 contracts.

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