DTN Cotton Open: Market Breaches Ninety Cents

Cotton insecticide spraying. ©Debra L Ferguson

The cotton market finally pierced its ninety-cent resistance Thursday morning amid decent export sales news, and a retreating U.S. dollar. A surging Dow Jones is also helping cotton’s bullish cause. Although there are rising COVID infections, the marketplace (that is the equities and commodities) is handling the adversity fairly well.

The Dow is simply not that far from all-time highs, and recent economic data has been helping steady demand for cotton. To the latter, USDA released its weekly export sales Thursday morning. The following summary is from the Agency’s website.

Net sales of 40,000 RB for 2020/2021 were up 16 percent from the previous week, but down 22 percent from the prior 4-week average.

Increases primarily for Turkey (15,700 RB, including 500 RB switched from Vietnam and decreases of 600 RB), China (13,200 RB, including 4,100 RB switched from Hong Kong), Pakistan (4,600 RB, including 600 RB switched from Vietnam and 5,100 RB – late), Indonesia (3,700 RB, including 1,100 RB switched from Thailand, 1,000 RB from Vietnam, 900 RB from Pakistan, 700 RB from Japan, and decreases of 1,300 RB), and Vietnam (2,600 RB), were offset by reductions primarily for Hong Kong (4,100 RB) and Mexico (1,000 RB).

For 2021/2022, net sales of 251,900 RB primarily for Turkey (100,500 RB), Pakistan (73,500 RB), Vietnam (36,300 RB), Mexico (24,500 RB), and China (13,900 RB), were offset by reductions primarily for the Philippines (2,600 RB) and Japan (2,100 RB). Exports of 246,100 RB were up 32 percent from the previous week and 2 percent from the prior 4-week average.

Exports were primarily to Vietnam (55,700 RB), Turkey (42,300 RB), Mexico (29,700 RB), Pakistan (24,300 RB, including 5,100 RB – late), and China (22,200 RB). Net sales of Pima totaling 3,400 RB were down 42 percent from the previous week and 39 percent from the prior 4-week average. Increases were reported for China (1,300 RB), Italy (1,100 RB), and India (1,000 RB, including decreases of 100 RB).

For 2021/2022, net sales of 900 RB were reported for Taiwan (400 RB), Bangladesh (400 RB), and Japan (100 RB). Exports of 10,400 RB were up noticeably from the previous week, but down 13 percent from the prior 4-week average. The destinations were primarily to India (4,500 RB), China (2,700 RB), Egypt (900 RB), Thailand (900 RB), and Honduras (900 RB). The new marketing season officially begins on August 1st.

The U.S. dollar has recently become overbought as it moved toward its March highs. Initially, the dollar became bullish when the Federal Reserve seemed to turn hawkish on interest rates. Since that time, Fed Chair Powell has been gingerly walking back certain comments.

For Thursday, close-in support for December cotton is 88.75 cents and 88.25 cents, while resistance stands at 91.00 cents and 91.50 cents. The estimated morning volume is 14,719 contracts.

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