The cotton market closed higher Thursday, driven by strong export-sales, buying to correct an oversold condition and the hopes of seeing positive numbers on Friday’s crop data. As earlier indicated, the market has generally lost some 25% of its 10-month move, peaking on Feb. 25, thus creating an “oversold condition.” Thus, short-covering and bargain-buying was seemingly the order of the day. Thursday’s weekly export-sales were definitely bullish compared to last week putrid sales of 78,000 bales sold. Thursday’s combined seasonal sales was a bit north of 310,000 bales. Already the current seasonal sales are running at 102% of USDA’s target. Thursday’s amounts will only increase that percentage.
Friday, USDA will issue its monthly supply-demand data for April. Traders are anticipating a slight decline to the 2020 crop and a higher uptick in exports, resulting in lower domestic ending stocks. Specifically, the average trade estimate for U.S. 2020-21 cotton production is 14.67 million bales versus 14.70 million in the March report. Exports are expected to come in around 15.58 million bales versus 15.50 million, while ending stocks are anticipated at 4.11 compared to 4.20 in March. World ending stocks are expected 94.43 million bales versus March’s 94.59 million.
Also Friday, the CFTC will release its commitment of traders report. Traders will be keying on the disposition of the managed-money speculators. If they are indeed rebuilding their net long position, other traders may be encouraged to buy as well.
Thursday, May cotton closed at 81.41 cents, up 1.91 cents, July settled at 82.66 cents, up 1.82 cents and December ended at 81.12 cents, up 1.08 cents; estimated volume was 57,523 contracts.