DTN Cotton Open: Market Swinging to Both Sides

    Photo: Larry Stalcup

    The cotton market is swinging to both sides of the trading pendulum with the July contract slightly higher, while new crop December is a bit lower. July cotton is in its delivery period and saw an additional 53 notices issued Friday. Thus far, that brings total deliveries to 223 contracts.

    All were stopped by SG Americas. December cotton is prepping for USDA’s high profile acres report out next Tuesday. The average industry estimate currently stands at 13.15 million acres, compared to the March planting intentions of 13.70 million.

    Cumulative sales for 2019/2020 have reached 16.97 million bales, the greatest since 2008. That is 121% of USDA’s original target for the current season. The 5-year average for this time of year is 105%. Yet, shipments do not appear to be keeping up with sales, which opens the door for potential cancellations. This will be especially true if China’s 2020 crop gets off to a good start.

    Weather-wise, conditions in Texas remain hot and dry. The 6-10 day forecast indicates little rain opportunities for West Texas and the Panhandle, with possibilities ranging between 10-20 percent. The Texas crop is already rated 40% very poor to poor.

    Next Monday’s crop condition data may show an ever-worsening situation. To that end, some analysts are thinking the 62.50 cents area is a real possibility for the December cotton to attempt.

    For Friday, support for the December contract lies at 54.40 cents and 59.00 cents, with resistance at 60.25 cents and 61.20 cents. Current estimated volume is a tiny 1,345 contracts traded.

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