Cotton Sympathetically Higher With Grains Monday

Strong Chicago grain futures, as well as surging energy prices, are helping lift the cotton market Monday. With no rain visible for the next seven days across the U.S. Midwest and deep drought conditions continuing to nag West Texas, the ICE fiber futures are materially up this morning.

In addition to cotton’s crop progress numbers Monday and export sales Thursday, traders will also see fresh CPI (Tuesday) and PPI (Wednesday) numbers. Their results will likely influence the new Federal Reserve’s insights on interest rates later this month.

Friday, the CFTC updated its Commitments of Traders data. Its specifics revealed managed funds net-bought 7,121 positions, increasing their current bullish carry to 39,106 contracts. 

The most current U.S. Drought Monitor shows 55% of the U.S. cotton area is in drought conditions. That reading compares to the previous level of 56%, versus its top peak of 98% drought earlier in the year.

Crude oil is markedly higher Monday amid renewed fighting with Iran. Despite the agreed-upon memorandum of understanding, the IRGC continues to attack commercial ships traversing the Strait of Hormuz. Also, new satellite imagery shows Iran is attempting to rebuild its nuclear program.

Chart support for December cotton stands at 80.15 cents and 79.30 cents, with resistance around 82.77 cents and 83.75 cents. Monday morning’s estimated volume is 17,243 contracts.

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