The cotton market has traded both sides of unchanged as it awaits the latest crop update for USDA. That report will be released at 12:00 p.m. Eastern Wednesday. The government is forecasting the new 2021/2022 crop to start out with production at 17.23 million bales versus 14.70 million for 2020/21.
Exports are expected to come in at 15.39 million bales against the 15.75 million for 2020/21. Domestic ending stocks are expected to be 3.67 million bales compared to the 3.90 million carryout. World ending stocks are expected to come in at 91.97 million bales versus the 93.46 million for 2020/21.
The Consumer Price Index for April rose 4.2% from a year ago, the fastest pace since September 2008. Surveyed economists were looking for an increase of 3.6%. One big reason for the acceleration was base effects; at this time a year ago, the economy was hit with the worst of the COVID-19 pandemic and inflation was unusually low. Federal Reserve officials see the current rise as temporary and not likely to influence policy.
The latest weather forecasts indicate some rain for West Texas, and more rain for the U.S. Delta. West Texas may receive up to one-half inch, while the Delta could experience two inches plus over the next five days. Overall, the 6-to-10 and 8-to-14 day outlooks call for above normal rainfall across much of Texas, except for West Texas where the forecast is for normal rainfall.
Thursday, USDA will issue its weekly export sales report at 8:30 a.m. EDT, while the CFTC is set to publish its commitment-of-traders report at 4 p.m. EDT Friday.
For Wednesday, close-in support for July Cotton is 89.70 cents and 86.00 cents, with resistance at 87.10 cents and 86.00 cents. The estimated morning volume is 10,643 contracts.