Cotton Backs-and-Fills

After a strong Monday run, followed by Tuesday’s decline, on Wednesday the cotton market is treading water. It’s somewhat divided by its positive technical and fundamental influences versus its historical seasonal tendency to top. Traders will continue to assess weather reports, export news, and geopolitical events for additional price influences.

Thursday at 8:30 a.m. EDT, USDA will release its weekly export sales. Last week’s numbers revealed a mere 47,000 bales sold. It was a marketing-year low. 

Option expiration for the July contract is Friday, June 12, or 32 days hence. Then spot July delivery commences on June 24, running through July 9.

On Friday at 3:30 p.m. EDT, the CFTC will update its Commitments of Traders data. Last week, the managed-money funds bought some 8,300 positions, lifting their net-long carry to 58,000-plus. The all-time bullish record, from 2018, stands at 108,788 contracts.

The current U.S. Drought Monitor showed a fractional improvement in the current general drought gripping the U.S. Cotton Belt. The current reading is 97% drought, which is off one tick from its previous reading of 98%. 

Crude oil prices are down Wednesday after President Trump again asserted the war with Iran will end “very quickly.” He further said he is “hours away” from striking Iran if no serious peace deal is in the works.

Chart support for December cotton stands at 81.90 cents and 80.50 cents, with resistance around 84.10 cents and 84.85 cents. Wednesday morning’s estimated volume is 13,450 contracts.

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