The cotton market is higher ahead of Thursday’s export sales. Last week USDA issued some very positive numbers, and in the face of its most recent carryout decline, traders are fearing even tighter stocks ahead. In addition, the weather for West Texas is looking bleak. Although there is the possibility that Lubbock will see a quarter inch of precipitation this week, with a tad more next week, that part of the cotton belt is in a severe drought.
As mentioned, USDA will issue its weekly export sales Thursday at 8:30 a.m. EDT. Current season sales are running at 104% of USDA’s target. Traders think stronger sales Thursday will likely lead to even lower domestic inventory.
The U.S. dollar is lower today as some traders are still playing the infection card. Tuesday’s CPI number (consumer price index) was higher than expected. Moreover, with all the government stimulus being shoveled out of Washington, currency traders think the buying power of the dollar will be greatly diluted over time.
For Wednesday, support for May cotton is 81.20 cents and 78.90 cents, with resistance at 83.45 cents and 84.40 cents. The estimated morning volume is 8,117 contracts.