The cotton market is attempting to post a Monday morning recovery after its sharp sell-off last week. Prices fell precipitously last Thursday and into Friday as a neutral crop report, poor sales and exports, and potential rain for West Texas combined to cause speculators to scurry from their bullish positions.
Friday afternoon the CFTC released its weekly commitment of traders reports and it showed net selling across all speculative categories. Certain managed-money funds had net sold some 2,200 contracts taking their net long position down to 55,000 plus contracts. However, given the sharp decline of late last week, we suspect that number is now even lower.
Monday afternoon at 4 p.m. EDT, USDA will report on the planting progress for the 2021 crop. Last week the total number indicated 25% of the nation’s crop had been planted versus its five-year average of 26% complete.
The cotton market is also eyeing the Chicago grains as they too have suffered a massive correction. Yet as, or actually “if”, the Chicago markets regain their bullish composure, such might encourage cotton higher.
For Texas, the 6-10 day forecast does call for above normal rainfall for central and east Texas, and normal rainfall for the West.
For Monday, close-in support for July cotton is 82.10 cents and 81.20 cents, with resistance at 85.80 cents and 88.27 cents. The estimated morning volume is 5,738 contracts.