DTN Cotton Open: Higher on Weaker Dollar, Decent Exports

The cotton market is taking economic lemons and trying to make lemonade. Overnight, the U.S. dollar took a tumble into fresh contract lows, while U.S. stock markets are higher. Additionally, weekly exports sales were not as dynamic as last week but were decent enough. China was the primary buyer. The cotton market is receiving a mishmash of positive and negative signals, but seemingly remains content to trade sideways, awaiting new and different news.

USDA reported weekly exports-sales this morning. A summary of that release is as follows:

Net sales of 277,900 RB for 2020/2021 were down 22 percent from the previous week, but up 33 percent from the prior 4-week average. Increases were primarily for China (130,800 RB), Vietnam (46,000 RB, including 4,600 RB switched from China and decreases of 5,800 RB), Pakistan (44,500 RB), Turkey (12,500 RB), and Indonesia (11,100 RB). For 2021/2022, net sales of 21,800 RB were for Vietnam (15,400 RB) and Mexico (6,400 RB).

Exports of 180,800 RB were down 1 percent from the previous week and 29 percent from the prior 4-week average. Exports were primarily to China (80,300 RB), Vietnam (27,500 RB), Pakistan (17,000 RB), Bangladesh (12,000 RB), and Mexico (11,700 RB). Net sales of Pima totaling 7,900 RB were down 71 percent from the previous week and 54 percent from the prior 4-week average. Increases were primarily for Peru (3,500 RB), Vietnam (1,800 RB), Honduras (1,200 RB), and Bangladesh (900 RB).

Exports of 27,600 RB–a marketing-year high–were up 27 percent from the previous week and 31 percent from the prior 4-week average. The destinations were primarily to India (12,400 RB), China (7,400 RB), Pakistan (4,100 RB), Vietnam (1,600 RB), and Thailand (1,000 RB).

December remains in its delivery period. Thursday morning there were eight notices tendered against spot December. They were issued by Term and stopped by SG Americas. The ping-pong game of deliveries continues to be played between two commercials.

Close-in support for March cotton is 71.10 cents and 70.50 cents, with resistance at 72.25 cents and 73.50 cents. Current morning volume is 6,135 contracts.

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