The cotton market is higher Thursday as the turbulence caused by China’s Evergrande and the Fed’s tapering seems to have somewhat abated. In addition, Thursday’s weekly export sales did show some dynamic business. Sales were materially higher than last week, and China led the buying pack.
A summary of the USDA’s data is as follows: Net sales of 345,400 RB for 2021/2022 were up 21 percent from the previous week and 27 percent from the prior 4-week average. Increases were primarily for China (219,800 RB), Turkey (52,700 RB), Pakistan (36,200 RB), Vietnam (9,700 RB, including 3,700 RB switched from China, 500 RB switched from Japan, and decreases of 500 RB), and Peru (5,500 RB, including decreases of 100 RB). Exports of 176,800 RB were down 26 percent from the previous week and 7 percent from the prior 4-week average.
The destinations were primarily to Turkey (36,000 RB), China (32,700 RB), Vietnam (25,700 RB), Mexico (22,700 RB), and Pakistan (19,700 RB). Net sales of Pima totaling 23,500 RB were up noticeably from the previous week and up 86 percent from the prior 4-week average. Increases were primarily for India (16,000 RB), Peru (2,400 RB), Turkey (1,500 RB), China (1,300 RB), and Greece (900 RB).
Exports of 3,800 RB were up 23 percent from the previous week, but down 45 percent from the prior 4-week average. The destinations were to India (2,800 RB), China (500 RB), Peru (300 RB), and Pakistan (200 RB).
The market’s higher action is also being influenced by mill fixation type buying. Still, open interest remains high, and the managed-money funds are thought to be overloaded net long. Thus, with the so-called technical damage done to the charts, short-sellers may become all the more active.
Weather wise, the intermediate and longer-term forecasts indicate below normal precipitation in the Delta and the Southeast, but above normal for Texas. With harvest officially commencing on October 1, the Delta and Southeast could benefit from the dryout.
For Thursday, close-in support for December cotton is 90.00 cents and 89.50 cents, while resistance stands at 91.60 cents and 92.00 cents. The estimated morning volume is 7,120 contracts.