The cotton market is trading lower Friday after its nearly hundred-point gain on Thursday. That rally was inspired by USDA’s weekly export sales data which showed triple-digit sales, but also a blowout shipment number of 400,000 bales plus. Both China and Vietnam were dominant players.
Then the market turned its attention to the possible formation of a hurricane emerging in the Gulf of Mexico. However, Thursday’s volume was not necessarily commensurate with the news. The market failed to hurdle its standing August high of 65.05 cents.
The 6-10 day forecast has West Texas below normal rainfall and the entire county with above normal temperatures. However, the U.S. Delta and the Southeast are looking at above normal rainfall. Traders are watching two tropical depressions which appear to be heading for the Gulf of Mexico.
As of now they are unnamed, so they are listed as numbers 13 and 14. One appears to be threatening the coast of Louisiana, while the other is aiming for Alabama.
Friday afternoon CFTC will issue its latest information on the status of speculators and commercials. Managed money speculators have been net long the market for weeks, but unless the upside trend is verified with new highs, they are apt to reduce their positions.
For Friday, support for December cotton is 63.50 cents and 63.00 cents, with resistance at 64.75 cents and 65.10 cents. The current estimated volume is 4,745 contracts.