Cotton Stalls Among Surrounding Strength

The cotton market is slightly lower Wednesday, despite the surrounding strength in the energies, metals, and grains. Last week the ICE futures fell some 350 points; however thus far this week they have recouped about half. Still, demand has been slow as last week’s marketing-year-low sales testified.

Thursday, at 8:30 a.m., USDA will issue its weekly export sales report. Last week’s business was bearish in that net sales for the current season were 34,000 bales, a marketing-year-low effort. Weekly shipments were 214,900 bales, off 7% weekly.

On Friday at 3:30 p.m. EDT, the CFTC will update its Commitments of Traders information. Last week saw the managed-money funds buying in some 10,500 positions, further enhancing their net-long carry to 49,688 contracts.

Crude oil has spiked some 4% overnight as conflict in the Middle East continued to escalate. The U.S. carried out their 11th consecutive evening of strikes on Iran overnight. The Strait of Hormuz, key to the shipping of oil, remains a sticking point in negotiations between the two sides according to U.S. Secretary of State Marco Rubio.

Additionally, the U.S. dollar has gained broadly overnight. A continuation of military strikes on Iran supports the greenback due to its safe-haven status and often positive correlation to oil prices.

Chart support for December cotton stands at 79.75 cents and 79.10 cents, with resistance around 80.90 cents and 81.75 cents. This morning’s estimated volume is 5,907 contracts.

Keith Brown can be reached at commodityconsults@gmail.com or by calling (229) 890-7780.