Overnight the cotton market posted new highs for its run pretty much in sympathy with the Chicago Grains. Corn, soybeans and wheat have all made contract highs. Of course, cotton has other bullish drivers, which include adverse weather and strong exports.
To that end, USDA released its weekly report, and a summary is as follows: Net sales of 103,100 RB for 2020/2021 were down 16 percent from the previous week and 44 percent from the prior 4-week average.
Increases primarily for China (38,600 RB), Vietnam (22,600 RB, including 2,200 RB switched from Hong Kong, 300 RB switched from China, and decreases of 5,400 RB), Turkey (18,600 RB), Indonesia (9,500 RB, including decreases of 100 RB), and Pakistan (7,500 RB, including 3,700 RB switched from Turkey, 800 RB switched from India, and decreases of 200 RB), were offset by reductions for Hong Kong (2,200 RB) and Thailand (1,800 RB).
For 2021/2022, net sales of 42,800 RB were primarily for China (15,400 RB), South Korea (13,200 RB), Vietnam (5,300 RB), Turkey (4,400 RB), and Peru (4,000 RB). Exports of 329,000 RB were up 5 percent from the previous week, but down 1 percent from the prior 4-week average. Exports were primarily to Vietnam (85,800 RB), China (64,600 RB), Pakistan (43,200 RB), Turkey (36,300 RB), and Mexico (25,000 RB).
Net sales of Pima totaling 6,700 RB were up noticeably from the previous week and up 22 percent from the prior 4-week average. Increases were reported for India (3,800 RB, including decreases of 300 RB), Peru (2,300 RB), Bahrain (400 RB), and Japan (200 RB). Exports of 19,600 RB were up 19 percent from the previous week and 27 percent from the prior 4-week average.
The destinations were primarily to India (4,600 RB), Vietnam (3,700 RB), China (3,500 RB), Peru (3,400 RB), and Bangladesh (1,300 RB).
The weather forecast for West Texas remains bleak. The 6-10 and 8-14 day shows hot and dry conditions gripping that part of the Cotton Belt. The Southeast will see a heavy dose of rain this weekend, along with cool temperatures. One can say the start of the 2021 season is less than ideal.
Cumulative sales have reached 95.0% of the USDA’s forecast for the marketing year versus a five-year average pace of 96.3%. USDA was forced to raise its marketing year estimate in its April Crop Report as current season sales were far outpacing the government’s original target.
The current stocks/use ratio is 21.6%, which is the lowest since 2017/18 and the second lowest since 2014/15, yet it is not record low. This suggests that there could be room for more a higher export number before the old crop season ends.
For Thursday, close-in support for May cotton is 84.30 cents and 83.95 cents, with resistance at 86.00 cents and 87.00 cents. The estimated morning volume is 6,340 contracts.