Cotton Has Counter Trade Tuesday
The cotton market experienced what some traders call a “running correction.” That is, although the market posted a new high for the move, followed by a momentary 90-point decline, no real chart damage was done. In fact, such intraday breaks are often considered “healthy” for the market.
The National Hurricane Center indicates two possible storm events. Tropical Storm Epsilon is brewing in the mid-Atlantic and then a swirl in the lower Caribbean. Epsilon appears to be heading for Bermuda, while the swirl seems headed for the Yucatan of Mexico. As of now neither storms are threatening the U.S. mainland, but with Mother Nature one can never definitely know.
The one to five-day forecast calls for above normal rainfall from east Texas across the U.S. Delta and into the Southeast. In fact, south Alabama and Georgia are expected to bear the brunt of this rain. If this rain materializes, then harvest could be slowed into next week. The six- to 10-day outlook also has above normal rains.
The market is looking forward to Thursday’s export sales report. Last week, sales were weaker but Pakistan and Bangladesh emerged as prominent buyers. The rationale is that, perhaps, COVID-19 is lifting in those nations, as it is thought to be doing so in other Asian countries. Subsequently, those countries are attempting to open up their economies, and need raw cotton to feed their mills.
For Tuesday, December cotton closed at 71.02 cents, down 0.14 cent, March settled at 71.70 cents, down 0.13 cent and December 2021 cotton finished at 70.57 cents, down 0.05 cent. Estimated volume was 32,027 contracts.