The cotton market continues to build upon last week’s massive turnaround by posting all time contract highs overnight. Suddenly the fears that the U.S. 2021 crop may not be as large as initially thought may be coming to fruition.
During the latter part of the growing season the Delta and the Southeast have been hurt by constant wet and cold conditions. Moreover, there now is talk that India is seeing a pink bollworm infestation, which could also potentially diminish production.
The CFTC issued its weekly Commitment of Traders data last Friday, and it revealed some liquidation. The managed-money funds, as of September 21, net sold some 10,645 contracts, thus reducing their net long position to 81,272 contracts. However, given the massive turnaround from last week’s 89.02 low to current high, they may be inspired to return to the buy side.
Monday afternoon at 4 p.m. EDT, USDA will issue its weekly crop condition numbers. It is thought if that data shows meaningful deterioration, it will be all the more encouraging for the speculators to buy back their sold-out positions.
Weather-wise the six to ten-day forecast suggests above normal precipitation for much of West Texas, right at a critical developmental stage. Parts of West Texas show above normal precipitation for the 8 to 14-day outlooks as well.
For Monday, close-in support for December cotton is 96.00 cents and 95.50 cents, while resistance stands at $1.00, and $1.50. The estimated morning volume is 31,425 contracts.