Cotton market is trading with triple-digit losses Friday morning as end-of-the month adjustments are occurring. Often at such times, the managed-money funds tend to square their positions to reflect a profitable month. This action helps them in their pursuit of new investors. Additionally, above 90 cents, cotton growers are most likely hedging or fixing some of their yet-to-be-determined 2021 production.
Friday afternoon, CFTC will update its status on certain trading participants. Perhaps the most closely watched are the managed-money funds. The last count has that group at 59,000, plus or minus, contracts net long. For comparison at the February high they were roughly 80,000 contracts net long.
Into next month, beside the ordinary condition reports and export sales data, USDA will issue its monthly supply-demand numbers August 12. This report, and all subsequent ones, will be based on actual yields.
The latest Drought Monitor Map indicates few, if any, areas of Texas, the Delta, or the Southeast under any type of inordinate dry conditions. To that end, the one to five-day forecast calls for light to moderate rain in Texas, with heavier drenching across the Delta and Southeast. The 6 to 10-day outlook calls for below normal temperatures across the Cotton Belt, with normal to above normal rainfall. Texas is the exception, as the Texas Panhandle looks dry.
For Friday, close-in support for December cotton is 88.70 cents and 88.10 cents, while resistance stands at 91.00 cents and 91.50 cents. The estimated morning volume is 7,745 contracts.