The cotton market reversed course during the night and is trading higher. The market is being inspired by certain outside commodities markets, who are in their own recovery. Traders also felt Monday’s rain potential for West Texas fell short of expectations. Even though there was some rain, there were high winds as well. Technically, December cotton was ringing short-term “oversold” as certain indicators were displaying, and given the market did not take out Friday’s low, some traders rethought their bearish positions and covered.
Monday USDA issued its weekly planting progress data. Essentially, this year’s planting pace is right on schedule. The national crop is 38% planted versus 42% last year, and the five-year average of 40%. Specifically, Texas is 35% complete versus last season’s 45% and the five-year average of 34%. Georgia, the number two producer, stands at 37% done versus last year’s 39% and versus the five-year average of 45%.
In a general comment, there is an inflationary tilt in the U.S. economy and thus to the commodity complex. Many outside markets remain in steep uptrends. The huge earnings report of Home Depot this morning is a testament to domestic demand, and a bullish development. The U.S. dollar was down for the second day in a row which should be supportive to cotton.
For Tuesday, close-in support for July cotton is 81.60 cents and 80.99 cents, with resistance at 83.76 cents and 85.55 cents. The estimated morning volume is 6,250 contracts.