After suffering an intraday sharp decline Thursday, cotton managed to post a fractionally lower close. Earlier in the day, traders perceived the export sales as neutral to bearish, and with outside commodities bearishly falling, it was an easy decline. However, midsession, the selling pressure abated and the market managed to stage a small recovery. Volume, however, was extremely muted.
To some degree, cotton may have also found support from Dow Jones. From its Sunday low through Thursday trade, the Dow has rallied over 1,000 basis points. Thursday morning’s steady unemployment claims from the Labor Department, and the potential for a non-partisan deal on infrastructure, carried bullish effects on the stock market.
From the weekly export-sales data, we note cumulative new-crop sales are running well behind last year and the five-year average. Recent information shows cumulative 2021-20 sales have reached 2.144 million bales, down from 3.028 million of last year. That amount is the lowest level since the 2015-16 season.
Weather-wise, the one to five-day forecast indicates rains across major cotton growing areas, with the heaviest in the Texas panhandle, Oklahoma, and northern Arkansas. The six- to 10- and the eight- to 14-day forecasts call for below-normal temperatures and above-normal precipitation across the entire Cotton Belt, with emphasis on the Mississippi Delta region.
Friday, July cotton will enter its second day of deliveries. Thus far, there have been 39 notices tendered. July cotton will expire on July 8.
As the market heads into its Friday Session, December cotton is up 1.55 cents on the week, up 3.41 cents for the month and is 13.03 cents higher on the year.
For Thursday, July closed at 86.03 cents, down 0.43 cent, December settled 86.73 cents, down 0.21 cent and March 2022 ended at 86.39 cents, 0.04 cent lower; estimated volume was 16,085 contracts.