Cotton Market Resumes Higher Monday Morning

After some hesitancy last week, the cotton market is right back in its pursuit of higher highs. Traders still see the U.S. crop as being in trouble as 98% of the planted area is suffering from some form of drought. In fact, some of the forecasted weekend rains for the parched Southeast didn’t necessarily materialize. Also, the CFTC update was supportive to the rally.

First notice day for the May contract was last Friday. Thus, 38 notices were tendered against the Spot May contract. The largest deliverer was StoneX, while the best stopper was SG Americas. The delivery process runs through May 6.

Last Friday, the CFTC updated its Commitment of Traders standings. Per last Tuesday’s close, the managed-money funds bought some 17,600 positions, lifting their net-log carry to 34,464 contracts.

At 4 p.m. today, USDA will issue the latest Crop Progress report. Last week, the U.S. cotton crop was reported at 11% planted, in line with the five-year average.

The Climate Prediction Center has upped its drought reading for the U.S. Cotton Belt from 97% to 98%. With that, the 6-to 10-day map (May 2-6) shows below-normal to much-below normal temperatures for Texas, the U.S. Delta and the Southeast. Rain wise, Texas looks to have normal chances, as does the Delta, but the Southeast has above-normal odds.

The Federal Reserve meets Tuesday and will announce any change to U.S. monetary policy on Wednesday at 2 p.m. EDT. Currently, no change is expected in interest rates.

Chart support for July cotton stands at 78.25 cents and 77.65 cents, with resistance around 80.75 cents and 82.00 cents. Monday morning’s estimated volume is 13,215 contracts.

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