Overnight the cotton market rallied over 100 points higher, but thus far has failed to keep those gains. The strength of the U.S. dollar and falling energy prices are keeping bullish buyers at bay.
Tuesday, USDA will issue its March crop report. Its supply-demand numbers are expected to shake out with lower U.S. production, increased exports, resulting in a lower domestic carryout. Additionally, Tuesday marks the expiration of March cotton. To that end, there were no notices issued today. Thus far in this delivery period only 91 notices have been tendered.
Friday’s Commitments of Traders indicated certain managed money funds were net sellers of some 6,400 contracts for the week ending March 2. Their selling action reduced their net long position to 66,031. At their peak, they were net long nearly 80,000 contracts.
Over the weekend, the U.S. Senate passed the COVID relief bill strictly along party lines. Ultimately, the measure is expected to be highly inflationary to the U.S. Economy. Although the legislation was characterized as urgent, much of its spending is spread out over the next several years.
For Monday, support for May cotton is 86.50 cents and 85.70 cents, with resistance at 89.10 cents and 90.00 cents. The estimated morning volume is 8,092 contracts.