After its moderate recovery Tuesday, the cotton market is trading slightly lower Wednesday. To some degree the market was hijacked by the imploding Chicago grains on Monday, but did manage a bit of separation on Tuesday.
Wednesday afternoon at 2 p.m. EDT, the Federal Reserve will announce its latest assessment on the U.S. economy. Traders are expecting no move on interest rates but there is some fear about what insight Fed Chair Powell may indicate in his post press conference regarding future monetary policy.
The immediate weather outlook for West Texas calls for supremely hot and dry conditions to prevail with temperatures hitting triple digits. Moreover, there is no rain for the 5-day forecast. Longer-term the 6-to-10 day outlook suggests normal precipitation in the western half of the state, but the 8-to-14 day forecast indicates below normal chances of rain for that same area.
Thursday morning, USDA will issue its weekly export sales report. Last week’s report showed sales at 108,200 and shipments of 258,000 bales. Both categories were below the prior week’s business.
Traders are gearing up for the June 30 USDA Planted Acreage Report. Expectations are calling for a huge reduction in cotton acreage, complemented by a massive increase in corn and soybean plantings. It is thought between 5 to 7 million acres were pulled into the grains mix. USDA’s original cotton acres estimate is 12.00 million, but early guesses are placing that amount closer to 11.00 million.
For Wednesday, close-in support for December cotton is 85.80 cents and 85.30 cents, while resistance stands at 87.75 cents and 88.50 cents. The estimated morning volume is 4,714 contracts.