The cotton market is trading both sides of unchanged as it awaits Thursday’s export sales, as well as keying on outside markets. USDA’s weekly sales data will be released at 8:30 a.m. EDT, and while some traders expect a decent report, hardly anyone is anticipating extraordinary numbers. Thus far Vietnam has been the largest buyer with China in-and-out of third place.
Outside markets Wednesday show the U.S. stock markets all lower, as well as the energy complex. The recent spike in COVID-19 infections, especially in India, have caused traders to assume demand for fuels will be decreased. In addition, the U.S. dollar is higher this morning.
Technically the cotton market finds itself at key chart resistance. That is, old crop contracts are trading just below their 50% resistance level, while new crop December is hovering below its 62% ceiling. Those overhead resistance levels are derived by measuring from cotton’s February 25 highs down to its March/April lows.
The ongoing drought in Texas may soon expand. The 6-10 and 8-14 day forecasts are still calling for above average temperatures and below normal precipitation across West Texas. Moreover, the immediate 5-day forecast shows zero rainfall for West Texas.
For Wednesday, close-in support for May cotton is 83.35 cents and 83.75 cents, with resistance at 85.25 cents and 85.75 cents. The estimated morning volume is 3,725 contracts.