The cotton market is higher Monday morning as traders weigh the potential damage that might come from Tropical Storm Zeta. Currently this weather event is located around the Yucatan Peninsula, but it is expected to emerge in the Gulf of Mexico, eventually achieving hurricane status. Its current projected path has it making landfall once again to storm-beaten Louisiana.
Another positive driver for the market is the ever-increasing bullish position held by spectators. Friday afternoon the CFTC reported certain trading funds had increased their net-long position to 65,000 plus contracts. While that may not be a record, it is controlling some 6.50 million bales for a trading entity that does not have any eventual “home” for such an inventory.
Monday afternoon, USDA will update the harvest progress of the crop. Last week, harvest was at 35% gathered, but we understand producers are just about finished with their peanut harvest and will jump on cotton harvesting with “both feet.”
There is a plethora of volatile outside news that is increasing swings in the global marketplace. Monday’s top story relates to the ramp-up of COVID-19 cases in the U.S. That event is keeping the U.S. stock markets lower. Additionally, Spain has announced it will virtually close its economy until next April. Italy said it will continue to shutter all restaurants, while France has a 9 p.m. curfew.
For Monday, support for December cotton stands at 71.50 cents and 70.60 cents, with resistance at 72.20 cents and 73.00 cents. Overnight estimated volume is 7,860 contracts.