DTN Cotton Open: Higher on Technicals, Weather

Photo: Denise Attaway, Clemson University

The cotton market is inching higher on its technical rebound and some concern about Hurricane Sam. On Monday the market collapsed some 300 points as news of a failing Chinese’s real estate company spooked many global markets. However, the markets did rebound amid hopes that the firm would meet its interest payment deadline. As of now, it has not done so, thus the Dow is off 150 points. However, cotton traders are keenly watching the track of Hurricane Sam. Currently, it could turn up the Atlantic Seaboard, or hook lower and enter the Gulf of Mexico.

Friday afternoon, CFTC will update its commitment-of-traders data. Managed-money funds are heavily net-long, but as the market heads towards the end-of-the-month, and especially the end-of-the-quarter next week, there may be some serious squaring of positions.

Cumulative sales for 2021/22 have reached 6.650 million bales, which is down from last year’s pace of 7.72 million, as well as below the five-year average of 7.40 million bales. Sales have reached 45% of USDA’s forecast for the marketing year versus a five-year average of 52%.

Weather-wise, the 6 to 10-day and 8 to 14-day outlooks show below normal precipitation in the Delta and the Southeast, but above normal for Texas. However, to reiterate, the appearance of Hurricane Sam could change everything.

For Friday, close-in support for December cotton is 92.00 cents and 91.10 cents, while resistance stands at 93.20 cents and 93.95 cents. The estimated morning volume is 7,654 contracts.

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