DTN Cotton Open: Sharply Lower on Chinese News

Photo: Clemson University Public Service and Agriculture

Cotton is sharply lower Monday as internal financial troubles are upsetting the Chinese financial system. A major Chinese real estate group, called Evergrande, is on the verge of filing for bankruptcy, and with it, billions of dollars of small Chinese investors. The Hong Kong market has fallen some 4% and its bearish wake is making itself felt across the world’s financial markets. The Dow Jones is off some 600-plus points.

This past Friday the CFTC issued its weekly Commitment of Traders report. Its data showed that managed-money funds increased their long position to a standing 91,900-plus contracts. Their modern-day high was 108,000 contracts back in June of 2018.

Monday afternoon USDA will issue its weekly crop conditions/harvest data. The 2021 crop has enjoyed superior ratings for much of the season. However, last week amid rain troubles across the Delta and the Southeast, the crop was slightly lowered. Yet not making Monday’s tabulations is the rainy weather that has been punishing the lower parts of Alabama and Georgia this weekend.

Traders are anticipating this week’s Federal Reserve meeting. The Fed will meet Tuesday and Wednesday to decide if pulling away its stimulus from the U.S. Economy is warranted. Currently, the U.S. dollar is markedly higher.

For Monday, close-in support for December cotton is 89.50 cents and 89.00 cents, while resistance stands at 92.50 cents and 92.75 cents. The estimated morning volume is 21,055 contracts.

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