After its precipitous decline this week, the cotton market is definitely playing defense. The market saw a huge hook reversal pattern on Wednesday, accompanied by massive volume. Thus, with today being the last day of calendar October, and with Tuesday’s presidential election dead-ahead, buyers will be none-too-eager to re-enter on the long side.
Additionally, once the remnants of Hurricane Zeta leave the farm-scape, producers will be right back at harvesting their cotton.
The CFTC may offer a better picture of the market’s trading structure in Friday afternoon’s commitment-of-traders report. However, data will be as of this past Tuesday, one day prior to Wednesday’s big bearish melt. Still, with two huge volume sessions, there were speculators who indeed came loose of their positions.
Cumulative sales for 2020/2021 have reached 8.75 million bales, down from the 9.20 million dales by this time last year, but higher as compared to the five-year average of 7.19 million bales. Thus total sales are 65% of USDA seasonals target compared to the five-year sales pace of 54%. It was highly interesting that Pakistan, the world’s fourth largest cotton producer, was yesterday’s top buyer of 126,000 or so bales.
As it starts its final Friday of October, December cotton is down 150 points weekly, up 400 points on the month, and off 57 points for the year.
For Friday, support for December Cotton stands at 68.75 cents and 68.50 cents, with resistance at 70.70 cents and 71.10 cents. Overnight estimated volume is 10,011 contracts.