The cotton market traded higher overnight, somewhat following Chicago grains as well as the news of new Chinese import quotas. Grains made new contract highs overnight as bullish weather conditions in South American and the U.S. Plains continues to undergird those markets.
The other news was announced by China’s National Development and Reform Commission to issue an additional 700,000-tonne quota (3.2 million bales) for cotton imports in 2021.
Last Friday, post close, the CFTC released its Commitments-of-Traders data, which showed managed-money traders bought some 6,700 contracts since April 27. This action swelled their net long position to 58,668 contracts. At their peak trading last February, they were net long some 80,000 contracts.
West Texas continues to face a severe drought situation. Although the region did receive some rain last week, it was nowhere enough to break the dryness. The current 6-10 day forecast calls for above normal temperatures and below normal precipitation, while the 8-14 day does allow for better rain opportunities.
On tap this week will be Monday afternoon’s crop progress data from USDA, as well as Thursday’s weekly export sales report. Spot May cotton remains in delivery until it expires on May 6, also on Thursday. There was one notice issued Monday. To date, the total amount of notices tendered has been 67 contracts.
For Monday, close-in support for July cotton is 87.70 cents and 85.90 cents, with resistance at 90.30 cents and 91.70 cents. The estimated morning volume is 4,267 contracts.