After collapsing to near limit-down levels Thursday, the market is bouncing back quite nicely on Friday. It was somewhat disconcerting to see such strong sales and poor exports on Thursday, only to have the market focus on the poor exports and move sharply lower.
Of course, with the global shipping crisis intensifying, the rationale among traders is more like “even if you sell it, if you can’t ship it, then what good is it?” Thus the wild, two-sided action of cotton continues.
Friday afternoon at 4:00 p.m. ET, the CFTC will report on the adjustments it makes to the status of traders. To that end, some subscribers have asked about how the CFTC knows such information.
Well, the government requires certain level trading entities, albeit speculators and hedgers, to declare their buying and selling actions, and with that data, the tabulators conclude who is long or short or spread, and to what depth. Yet the data always lags the immediate market. As of last count, the managed-money finds (speculators) remain massively net long.
From Thursday’s weekly exports-sales, we note that cumulative sales for 2021-22 have reached 8.009 million bales. that is off from 2020’s 8.46 million, and below the five-year average of 8.056 million. Sales have reached 55% of the USDA’s forecast for the marketing year versus a five-year average of 57%.
For Friday, close-in support for December Cotton is 105.80 cents and 105.00 cents, while resistance stands at 109.50 cents, and 111.00 cents. The estimated morning volume is 7,415 contracts.