Cotton Grinds Higher

The cotton market is somewhat higher Wednesday as end-of-the-month squaring and speculative short-covering are occurring. Currently, the market is on task to close higher today, making it five out of the last six sessions.

Last night, President Trump delivered the longest State of the Union address in modern history. In it, he extolled the economic gains being made and was upbeat about the future. We note that agriculture was not specifically mentioned but certainly trade and tariffs were more than inferred.

Overnight, Spot March cotton was hit with 462 notices. It was one of the largest issuances in recent memory. BNP (448) and Term (18) were the issues, with JP Morgan (230) and SG Americas (231) as the stoppers. The delivery period runs through Monday, March 7. 

Thursday, USDA will release its weekly export sales report. Last week saw a combined seasonal sales number of 335,663 bales, for which the old crop was a marketing-year-high amount. Weekly shipments were 172,6000 bales, off 9% from the previous week.

On Friday at 3:30 p.m., CFTC will issue another Commitments of Traders report. This past week’s showed managed-money funds had net sold some 3,900 contracts, swelling their current bearish position to 79,508 contracts. For context, their record high negative carry, from last October, stands at 81,343 contracts.

Chart support for July cotton stands at 66.60 cents and 66.00 cents, with resistance around 68.20 and 68.50. Wednesday morning’s estimated volume is 23,738 contracts.

Keith Brown can be reached at commodityconsults@gmail.com or by calling (229) 890-7780.