The cotton market is higher overnight amid strong export sales as well as trying to correct an oversold condition. To the latter, the market has essentially lost some 25% of its move off the February 25 high. So fast and furious has been that correction, the market has become oversold.
Often that condition provides the technical basis for a comeback of sorts. To the former, Thursday’s weekly export sales were much improved over last week’s 70,000 bales sold. A summary of USDA’s numbers follows:
Net sales of 269,900 RB for 2020/2021 were up noticeably from the previous week and up 8 percent from the prior 4-week average.
Increases primarily for Vietnam (136,200 RB, including 4,400 RB switched from China and 2,200 RB switched from Hong Kong), Pakistan (49,900 RB, including decreases of 200 RB), China (31,200 RB, including decreases of 8,300 RB), Turkey (21,800 RB), and South Korea (7,900 RB), were offset by reductions primarily for Hong Kong (2,200 RB) and Malaysia (300 RB).
For 2021/2022, net sales of 49,000 RB were primarily for Indonesia (13,200 RB), China (13,200 RB), Turkey (11,800 RB), Pakistan (5,700 RB), and Mexico (2,600 RB).
Exports of 371,700 RB were up 15 percent from the previous week and 11 percent from the prior 4-week average. Exports were primarily to Vietnam (121,200 RB), Pakistan (53,000 RB), Turkey (51,300 RB), China (45,800 RB), and Mexico (16,700 RB).
Net sales of Pima totaling 7,500 RB were up 73 percent from the previous week, but down 2 percent from the prior 4-week average. Increases primarily for China (4,400 RB), Pakistan (1,500 RB, including 1,100 RB switched from the United Arab Emirates), India (700 RB, including decreases of 100 RB), Greece (400 RB), and Turkey (400 RB), were offset by reductions primarily for the United Arab Emirates (1,100 RB) and Japan (200 RB).
Exports of 21,600 RB were up 51 percent from the previous week and 50 percent from the prior 4-week average. The destinations were primarily to India (7,200 RB), China (4,800 RB), Peru (3,200 RB), Pakistan (2,400 RB), and Austria (900 RB).
Friday at 12:00 p.m. EDT, USDA will issue its monthly supply-demand data for April. Traders are anticipating a slight decline to the 2020 crop, a higher uptick in exports, and thus a lowering of domestic ending stocks.
Friday afternoon at 4 p.m., the CFTC will release its commitment-of-traders report. The key component will be where the managed-money speculators stand in terms of position (long or short) and their depth (how many contracts).
For Thursday, support for May cotton is 79.30 cents and 77.50 cents, with resistance at 81.50 cents and 81.90 cents. The estimated morning volume is 6,753 contracts.