Failing to have any direct fundamentals of its own to trade, the cotton market is electing to trade lower in sympathy with the Chicago Grains. Over the weekend a wide swath of the Midwest did receive rain and is responding negatively. To that end, TS Claudette swept across the Delta and the Southeast bringing heavy rains, winds, and sadly 13 deaths.
In addition, fears are rising that the Federal Reserve may be pushed to hike interest rates sooner than planned, leading the U.S. dollar to its highest level since last March.
Monday afternoon at 3:30 p.m. EDT, CFTC will issue its delayed commitment-of-traders report. It is expected the managed-money speculators have slightly increased their net long position.
Monday at 4 p.m. EDT, USDA will publish its latest data of the planting progress and the condition of the 2021 crop. The market is already aware that Texas is off to the worst start on record, however those recent widespread rains may have helped the situation. Moreover, the torrential rains of Claudette that pounded the already water-logged Delta may have set that crop back.
This week several governors of the Federal Reserve will be speaking on the economy. It will be interesting to hear just how divided the Board is towards raising interest rates sooner rather than later.
Weather-wise, the 1-to-5 day forecast calls for moderate to heavy rainfall from east Texas to the Atlantic Coast, with virtually no rain for West Texas. In fact, the 6-to-10 and 8-to-14 day outlooks indicate above normal temperatures and below normal precipitation for West Texas as well. India’s monsoons seem to be slowing after a strong start.
For Monday, close-in support for December cotton is 84.40 cents and 83.92 cents, while resistance stands at 86.00 cents and 86.40 cents. The estimated morning volume is 10,167 contracts.