The cotton market is higher Friday morning as traders are encouraged by the ability of the long-standing technical trend to stay intact. Ever since its emotional and dynamic bottom this past April, the market has been on an upside tear. Now, with the hope of several vaccines, some traders are thinking about better days and thus continue to be bullish.
Current sales have reached 73% of USDA’s forecast for the 2020/21 marketing year versus a five-year average of 62%. The largest buyer this week was China at 130,811 bales, followed by Vietnam at 61,423 and Pakistan at 44,517. This was China’s largest weekly purchase since September 10 when they bought 444,060 bales. Weakness in the U.S. dollar has no doubt helped the US export market.
December cotton is in the waning days of delivery. There were eight deliveries posted today from Term Commodities. They were, as usual, stopped by SG Americas. To date, some 398 notices have been issued against various 2020 spot contracts. December cotton expires on the 8th.
Next week, USDA will issue its latest supply-demand data December 10. Last month, government tabulators increased the 2020 crop some 400,000 bales to 17.40 million. However, the consensus among harvesting producers is the current crop will come up demonstratively short. Hopefully, USDA will make such reflective adjustments.
Close-in support for March cotton is 71.00 cents and 70.20 cents, with resistance at 72.50 cents and 73.00 cents. The current morning volume is 6,485 contracts.