Cotton Unchanged, All Else Crumbles

In the face of a massive Monday sell-off in the energies and the grains, the cotton market is resiliently unchanged. Cotton’s technicals still carry a positive bent, while the funds added to their long carry last week. Traders will obviously keep one “trading eye” on the crude oil — that is the Middle East — with the other on news from the Fed or some other cotton specific report. 

Crude oil is getting crushed after Iran reportedly said it would suspend various attacks on Hormuz and other locales, as long as the U.S. pauses its hostilities. There are reports China is attempting to help initiate peace talks in Pakistan between the belligerents.

Last Friday the CFTC updated its Commitments of Traders data. The results showed managed-money funds bought some 3,500 futures, further swelling their net-long position to 53,209 contracts. 

Monday at 4 p.m. EDT, USDA will issue fresh crop condition numbers. Of late, the good-to-excellent readings have been moving two-sided. The highest reading was 54%, followed by a couple of weeks of 44% good to excellent, but Monday past was 45%.

Tuesday, the Federal Reserve meets to discuss U.S. interest rates and will announce its intentions at 2 p.m. EDT Wednesday. Currently, there is a 66% chance the central bank will not do anything. However, some governors would like to hike rates immediately. 

The 6- to 10-day weather forecast (Aug 1-Aug 5) shows much above-normal temperatures for Texas, while the Delta should experience only above-normal readings. The Southeast returns to a normal range. Rain-wise, Texas looks to have normal chances, while the Southeast should have slightly above-normal odds. 

Chart support for December cotton stands at 79.45 cents and 78.75 cents, with resistance around 81.00 cents and 82.00 cents. This morning’s estimated volume is 7,878 contracts.

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