Cotton Market Trying to Rebound After New Contract Lows

After its triple-digit plunge of Monday to new contract lows, on massive volume, the cotton market is trying to regain some “feeling” today. Most analysts offered few explanations as to “the why” of the big spill, but some are thinking the record open interest, and the potential government shutdown are both involved.  

The U.S. government may be heading for another partial shutdown on Jan. 30. The death of another Minnesota protester by federal agents this weekend is unifying the Democrats in Congress to halt the funding of the DHS budget. However, most funding for Homeland Security, some $29 billion, has already been approved. 

March options will expire on Feb. 6, or in about two weeks. Traders will be anticipating what amount of Puts and Call may expire “in-the-money”. 

This Thursday at 8:30 a.m. EST, USDA will issue its weekly exports-sales report. The previous two releases both showed marketing-year-year high sales amounts. Cumulative sales have reached 66% of the USDA forecast versus a five-year average of 80% for this point in the marketing year.

Also on Thursday, Q4 GDP, Factory Orders, and Durable Goods will be released. Expectations call for improvements in all numbers.  

Chart support for March Cotton stands at 6250 and 6200, with resistance hovering about 6400 and 6450. This morning’s estimated volume is 13,305 contracts.

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