DTN Cotton Open: Market Edges Higher

    The cotton market is edging higher comforted by the bullish action in the stock markets. Despite all that has gone before, the traders see the nation’s reopening as economically friendly, causing traders and investors to buy “cheap” and necessary crude commodities. Crude finally eased above $40 today, followed by stronger copper and cotton.

    Next week, spot July will enter its delivery period. With an open interest at 14,000 contacts, a lot of creative-style liquidation must occur before Wednesday’s FND.

    The most recent weather forecasts for both the 6-10 and 8-14 day prognostications are calling for normal to above normal precipitation across the cotton belt.

    Demand-wise, despite China’s recent rush to buy U.S. cotton, there are emerging concerns of further Chinese mill shutdowns given the resurgence of Covid-19.

    Early reports indicate India’s monsoon season is initially unfolding very strong this year, meaning there may be additional cotton sowing by farmers. Moreover, the government is encouraging more production by increasing the national procurement process.

    Cumulative U.S. sales for 2019/2020 have reached 16.80 million bales, the largest number since the 2008/2009 season. The 5-year average is 13,200 million. Percentage-wise this puts U.S. sales at 121% for the current marketing year compared with the 5-year average of 105% for this time of year. Suggestively, USDA might be forced to raise its export category in futures supply-demand reports.

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