Cotton Stabilizes Ahead of Holiday

Overnight, the cotton market is gently pressing its brakes. Ahead of a three-day weekend, some traders are pulling up and covering their short positions. Yet, we are also understanding there is more than casual interest being seen from cash merchants at these price levels. Traders will assess Friday’s CFTC data and watch the weekend weather, especially across Texas, implying next week will be pivotal to price.

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.

Option expiration for the July contract is Friday, June 12, or 21 days hence. Then spot July delivery commences on June 24, running through July 9. 

With the ICE Futures under the 80-cent mark, the daily limit has reverted to three cents, up or down, from the previous settlement.

The ICE Futures will be closed this Monday for the observance of Memorial Day. Trading will resume Monday night at 9 p.m. EDT.

The 6- to 10-day forecast (May 27-May 31) shows below-normal temperatures for Texas, and normal readings for the U.S. Delta and the Southeast. Rain-wise, the entire Cotton Belt — Texas to Georgia — shows above to much-above normal chances for rain events.

Chart support for December cotton stands at 78.25 cents and 76.00 cents, with resistance around 82.50 cents and 83.30 cents. Friday morning’s estimated volume is 20,121 contracts.

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