DTN Cotton Open: Sharply Higher, Few Notices, Weaker Dollar

Truck backing up to unload cotton module onto gin conveyor belt. ©Debra L Ferguson

The cotton market is posting another round of life-of-contract highs this morning. The trade saw few deliveries against the spot March contract. Specifically, there were a total of 18 notices tenders, all issued by Term Commodities, and stopped by Wells Fargo and JP Morgan.

Some traders thought given the high price of cotton there might have been numerous deliveries tendered. Of course, March’s delivery period runs until its expiration on March 9.

Current season sales have reached 92% of the USDA’s forecast for the marketing year versus a five-year average of 80%. China was the largest buyer last week at 44,079 bales. Chinese commitments for 2020/21 stand 4.55 million bales thus far.

CFTC issued its Commitments of Traders report for the week ending February 16. The tabulations showed managed money traders net long 68,568 contracts after net buying 335 contracts. The highest level we can recall was shy of 80,000 contracts. There still seems to be more room for additional buying.

Last week’s USDA Ag Forum projected domestic cotton production to increase by 2.5 million bales in 2021/22 to 17.50 million. However, carryout is expected to fall to 3.80 million bales from 4.30 million during 2020/21. USDA’s official Planting Intentions will be issued on March 31.

For Monday, support for May cotton is 90.30 cents and 89.00 cents, with resistance at 92.50 cents and 95.00 cents. The estimated morning volume is 10,216 contracts.

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