The cotton market continues to ramp higher as harvesting-hampering weather and bullish speculators collectively drive the market higher. Recent rains across the U.S. Delta and the Southeast have not only slowed gathering, but potentially downgraded the crop.
The upward move of the market has encouraged speculators to raise their bullish stake in the trade. Last Friday, the CFTC reported, via its commitment-of-traders data, managed-money speculators bought an additional 6,600 contracts. That action increased their net long position to 55,900 contracts. That is the equivalent of controlling 5.59 million bales of cotton.
Cumulative cotton sales for the 2020/2021 season have reached 61% of USDA’s proposed target. The five-year average for this time of year is 51% sold. Numerically, current sales are 8.20 million bales compared to 8.92 million bales one year ago, and 9.21 million bales two seasons ago.
Monday afternoon at 4 p.m. EDT, USDA will issue its crop progress/condition data. Last week the government indicated the gathering of the 2020 crop stood at 26% complete. However, with some locales enjoying clearer weather over the past few days, that number should be higher. The top concern for producers is quality. No doubt the adversities brought on by the recent hurricanes has resulted in a setback to grades.
This morning the U.S. dollar is lower on the adverse presidential polls but the Dow Jones and related markets are higher on the promise of a new stimulus bill getting passed this week.
For Monday, close-in support for December cotton stands at 70.00 cents and 69.00 cents with overhead resistance at 71.00 cents and 73.00 cents. The current estimated volume is 16,060 contracts.