Cotton Seeks Neutral Gear

After collapsing nearly 1,000 points off the May 88.08-cent high, the cotton market is at least trying to shift into neutral gear. Yet, some analysts say the market lacks friendly fundamental underpinnings. Currently, demand still lags, China has not initiated any new purchases, and the U.S. growing conditions are improving. 

Friday, USDA will issue a new round of export sales. Last week’s business saw improvements in the numbers, but overall, cumulative sales for this time of year are running roughly 10% behind the five-year average. The data is out at 8:30 a.m. EDT.

Also, on Friday, the CFTC will update its Commitments of Traders numbers. Last week’s data showed the managed-money funds had bought-in nearly 2,500 contracts, lifting their net-long carry to 62,000-plus positions.

Overnight, crude oil is sharply higher after fresh U.S. strikes on Iran renewed traders’ concerns over disruptions to commercial shipping through the Strait of Hormuz. Iran’s Revolutionary Guards said on Thursday that they had targeted a U.S airbase, but did not specify the location.

The 6- to 10-day forecast (June 2-6) shows below- to well-below- normal temperatures for Texas, the U.S. Delta, and the Southeast. Rain-wise, Texas is forecasted for slightly above-normal precipitation, while the Delta and the Southeast look to have much-above opportunities.  

Option expiration for the July contract is Friday June 12, while the spot July contract commences delivery on June 24, running through July 9. 

Chart support for December cotton stands at 78.00 cents and 77.50 cents, with resistance around 80.00 cents and 80.50 cents. Thursday morning’s estimated volume is 24,410 contracts.

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