DTN Cotton Open: Lower on Rain and Exports

Emerged cotton seedling. Photo: Orlando Flores, El Paso County, Texas AgriLife

The cotton market is sharply lower overnight as the potential for rain in key growing areas is weighing on prices, flimsy export sales from USDA and weakness of so many outside markets.

USDA’s weekly export sales are as follows: Net sales of 54,400 RB for 2020/2021 were down 15 percent from the previous week and 41 percent from the prior 4-week average.

Increases primarily for Vietnam (26,200 RB, including 5,800 RB switched from Indonesia and 1,800 RB switched from Hong Kong), China (14,500 RB, including 2,600 RB switched from Vietnam and 200 RB switched from Hong Kong), Bangladesh (7,800 RB), Pakistan (6,200 RB, including 900 RB switched from Vietnam and decreases of 4,300 RB), and Thailand (5,600 RB, including 2,700 RB switched from Indonesia, 2,600 RB switched from Taiwan and decreases of 400 RB), were offset by reductions primarily for Indonesia (4,800 RB), Taiwan (2,400 RB), and Hong Kong (2,000 RB).

For 2021/2022, net sales of 72,100 RB were for Pakistan (39,600 RB), Mexico (23,800 RB), Honduras (4,000 RB), Nicaragua (2,500 RB), and Thailand (2,200 RB). Exports of 277,200 RB were down 39 percent from the previous week and 23 percent from the prior 4-week average. Exports were primarily to Vietnam (73,700 RB), China (47,500 RB), Pakistan (41,900 RB), Turkey (25,900 RB), and Bangladesh (15,900 RB).

Net sales of Pima totaling 3,800 RB were down 66 percent from the previous week and 41 percent from the prior 4-week average. Increases were primarily for Honduras (2,300 RB) and India (1,300 RB). Total net sales for 2021/2022 of 200 RB were for Japan.

Exports of 19,300 RB were down 22 percent from the previous week, but up 3 percent from the prior 4-week average. The destinations were primarily to China (5,000 RB), India (4,700 RB), Pakistan (4,500 RB), Vietnam (1,700 RB), and South Korea (1,200 RB).

The GFS weather model calls for heavy rains across central and eastern Texas and lighter rains in the west. The 6-10 and 8-14 day forecasts call for above-normal chances of rain across the entire state. However, the Delta is in need of a rain “time-out” period. The 1-to-5 day forecast calls for above-normal precipitation.

The U.S. dollar remains higher overnight. Traders fear rising inflation will force the Federal Reserve to hike interest rates well ahead of its 2022 schedule to do so.

For Thursday, close-in support for July cotton is 86.50 cents and 84.90 cents, with resistance at 89.74 cents and 91.00 cents. The estimated morning volume is 11,948 contracts.

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