DTN Cotton Open: Early Profit-Taking Sets In

The cotton market is moderately lower Friday as profit-taking has set-in initially. Thursday’s supply-demand update was very friendly to the trade as ending stocks were shoved below the psychological 3.0 million-bale mark. Currently they are pegged at 2.90 million bales.

For comparison, the most recent carryout level was 2.75 million in the 2016/2017 season. Also pushing cotton lower Friday is a strong decline in the Chicago Grains. Thursday’s USDA data was friendly to corn, but unfriendly to beans, yet they all go down.

Friday afternoon, CFTC will update market participants in its commitment-of-traders report. Of late the managed-money speculators have been reducing their net long position. At their zenith in February they were nearly 80,000 contracts long; the most recent numbers have them about 35,000 contracts long.

Weather-wise, the 1-to-5 day forecast calls for light to zero rain for West Texas, but heavier amounts are expected to fall across the Delta, where it is not wanted, and over into the Southeast, where it is definitely needed. For much of the production belt, the 6-to-10 day forecast calls for below normal precipitation, while the 8-to-14 day outlook shows normal to above normal across most of the region, except for West Texas, which looks to be dry.

For Friday, close-in support for December Cotton is 88.80 cents and 86.20 cents, while resistance stands at 89.28 cents and 90.00 cents. The estimated morning volume is 9,429 contracts.

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