Cotton Trying to Bounce Back

After posting a sharp retreat in prices Monday, the cotton market is trying to gnaw away at the 80-cent mark Tuesday. Traders remain wary of certain growing conditions across the Northern Hemisphere. Later in the week, traders will see another round of export sales. Meanwhile, the funds continue to hold a decent bullish position.

USDA released its weekly Crop Progress report Monday. Its data showed 45% of the U.S. crop was rated good to excellent as of July 19. That reading is up from the 44% number of last week, but down from 57% a year ago. The five-year average for this date is 50%. Texas was 30% good to excellent, unchanged from last week but down from 51% a year ago and below the five-year average at 38%. Mississippi was 47% good to excellent, up from 39% last week and the same as 47% a year ago. The five-year average is 60%.  The 2026 crop is progressing at a normal pace, with 32% of the U.S. crop setting bolls, unchanged from a year ago and the five-year average.

On Thursday, 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%.

This Friday, the Commerce Department will release its New Home Sales data at 10 a.m. EDT. This report, along with the Housing Starts Report, play key roles in domestic consumption of cotton products.

Also 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.

The U.S. dollar is pushing on a one-week high, as traders concerned with increased hostilities in the Middle East are seeking financial refuge. There are ideas a new ten-day ceasefire may be in the works with the memorandum of understanding possibly put back on the table. However, Yemen’s Iran-aligned Houthis declared a naval blockade on Saudi Arabia, raising the threat to global energy supplies.

Chart support for December cotton stands at 78.50 cents and 77.75 cents, with resistance around 80.25 cents and 81.75 cents. Tuesday morning’s estimated volume is 6,209 contracts.

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