Overnight the cotton market is holding its own after its steep recovery Tuesday. At one time on Monday, the market was off well over two-hundred points. Much of the selling came from holiday-exiting speculators and producers. However, as the Dow Jones surged to new all-time highs, plus the drop in the U.S. dollar, March cotton’s lower close left a bearish taste in the mouths of some traders.
Besides its adequate supply, the cotton market is concerned with spiking COVID-19 cases and their possible effect on the U.S. economy going forward. There are several technical indicators giving off bearish signals.
Current weather forecasts indicate heavy rainfall from eastern Texas and across Louisiana, Mississippi and Alabama. The rest of the Delta and Southeast are subject to rain, just not as intense. This rain may potentially cause some harvest delays, but so far that has not been the case. As of Sunday, 77% of the crop was harvested, which was right in line with the 10-year average.
There were 51 deliveries placed against the spot December contract overnight. The notices were issued by Term (46), Marex (2), and JP Morgan (3). All were stopped by Societe General. Currently some 245 notices have been issued or re-tendered during the delivery process. The market will be closed tomorrow in observance of Thanksgiving and will only trade an abbreviated session on Friday from 8 a.m. to 1:30 p.m. EST. Weekly export sales, delayed by the holiday, will be released on Friday at 8:30 a.m. EST.
For Wednesday, support for March cotton stands at 72.20 cents and 71.85 cents, with resistance at 73.85 cents and 74.10 cents. The overnight estimated volume is 4,102 contracts.