The cotton market posted new highs Tuesday for the move as speculators covered their short positions, against buying from technical bulls.
After bottoming under the 50-cent mark on April 1, the market has rallied over 10 cents. In that process, the market has developed a well-defined trend up-channel, which is encouraging traders to buy on breaks.
If that chart formation stays true, it projects a likely upside target of 60.50 cents, which is a 50% retracement from the January high down to the April low.
The market is also anticipating strong weekly export sales for Thursday. The last three weeks have shown China to be a huge buyer, despite the fact the U.S.-China relationship is souring. In fact, it may be because of that deteriorating situation that China is a big buyer.
The market is keenly watching, for obvious reasons, the clinical trials for a COVID-19 vaccine. Just this week, the pharma company Moderna announced a positive outcome to several tests it had been conducting. Those results sent the Dow Jones up 1000 points Monday.
July cotton closed at 59.20 cents, up 1.40 cents, December ended at 59.17 cents, up 1.24 cents and March finished at 59.84 cents, up 1.11 cents. Estimated volume was 27,877 contracts.
Keith Brown can be reached at commodityconsults@gmail.com or by calling (229) 890-7780.
