The cotton market was lower Tuesday, sometimes even by triple-digits, as traders squared positions ahead of Wednesday’s WASDE from USDA. In addition, the sharply lower stock market somewhat unnerved bullish traders. At one time Tuesday, the Dow Jones was off some 700 points
USDA will release its supply-demand numbers for May Wednesday. For the report, the average trade estimate for U.S. 2021-22 cotton production is 17.23 million bales versus 14.70 million for 2020-21. Exports are expected at 15.39 million bales compared to the 15.75 million for last year.
Domestic ending stocks are expected to be 3.67 million bales versus 3.90 million for the prior season. World carryout is anticipated at 91.97 million bales versus 93.46 million for the 2020-21 season.
In the aftermath of the May WASDE, the market will see weekly export sales Thursday morning, followed by Friday’s Commitment of Traders data from the CFTC. The last information issued by the CFTC indicated the managed-money funds were actually net sellers of some 450 contracts, slightly reducing their overall net long position.
Given the height of the rally since April 1, some traders were thinking those trend-following participants would have been more bullishly active.
Cotton’s technical trend remains bullish, as its short-term, intermediate, and long-term trends remain bullish. However, this current rally originated during April 2020, and is beginning to look a bit weary. Such is why Wednesday’s report is so potentially important.
Tuesday, July cotton closed at 87.75 cents, down 0.72 cent, December settled at 85.53 cents, down 0.57 cent and March 2022 ended at 85.12 cents, down 0.36 cent; estimated volume was 22,225 contracts.