Cotton futures are trending lower Monday morning as Texas received some bits of weekend rain, plus July cotton enters delivery on Wednesday. The latter event implies all producers holding price-later cotton must fix at Tuesday’s close. Thus, as they do price the remnants of their 2019/2020 production, merchants are lifting (selling) their corresponding long hedges.
To the former event (rain in Texas) there was some fractional precipitation which indeed fell over the weekend. Yet, it lacked intensity. Looking out, the 6- to 10-day forecast for that area calls for normal temperatures, but below normal rainfall.
In Monday’s 3 p.m. CDT USDA Crop Progress report, USDA will report on the condition of the 2020 crop. Last week’s data indicate about 25% of the Texas crop was rated very poor to poor.
There seems to be heightened fears a second wave of COVID-19 is unfolding. Already there have been some 120,000 deaths, and several states have reported spikes in infections. Nonetheless, the Trump qdministration is opening up the U.S. economy and corresponding data would indicate it is returning strong.
Friday’s CFTC data indicated long-sided speculators are reducing those bullish positions. The numbers show they were net sellers of 3,569 contacts for the week ended June 16. Their action pared their long positions lower to a mere 2,950 contracts.
For Monday, support for December cotton stands at 58.75 cents and 57.75 cents, with resistance at 60.25 cents and 61.20 cents. Current volume is estimated at 4,225 contracts.