Cotton Folds on Friday

The cotton market is somewhat lower Friday as traders are seeking to either square or flatten certain positions. The ICE futures have been on a wild, upside tear for nearly seven weeks, without any sort of correction. Thus, today’s Friday retreat seems to be a normal response. Still, traders will assess the CFTC’s update, May cotton’s delivery, weather forecasts, and the geopolitical situation unfolding in the Middle East.

First notice day for the May contract is Friday, with any notice being issued post close. Its delivery period runs through May 6.

Also, Friday at 3:30 p.m. EDT, the CFTC will update its Commitments of Traders standings. Last week, for the first time in some two years, the managed-money funds had reversed to a net-long position. Currently, they are net-long some 16,000 contracts.

The Climate Prediction Center has upped its drought reading for the U.S. Cotton Belt from 97% to 98%. Clearly, U.S. cotton growers are facing a massive generational drought of Biblical portions. With that, the 6- to 10-day map (April 29 to May 3) shows below-normal temperatures for Texas, somewhat normal readings for the U.S. Delta, but above-normal for the Southeast. Rainwise, Texas looks to have normal to slightly above normal odds, the Delta and the Southeast with slight changes, with specifically greater opportunities for Georgia.  

Chart support for July cotton stands at 78.45 cents and 77.55 cents, with resistance around 81.10 cents and 82.00 cents. Friday morning’s estimated volume is 11,310 contracts.

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