Cotton Still Queasy

After numerous bouts of posting contract lows in recent days, the cotton market remains in a bearish funk Friday morning. Thus far, for the week, the market is off some 160 points, on massive volume sessions. Traders are simultaneously nervous and mesmerized by the record open interest accumulated at such a low ebb of prices.

March options will expire Friday on the close. Current open interest for spot March is around 160,000 contracts. Spot March will enter its delivery period Feb. 23. Traders and hedgers will have to vacate the contract the preceding Friday to avoid the notice process. 

Also, Friday at 3:30 p.m. EST, the CFTC will update its Commitments of Traders report. Its last release showed the managed-money funds had net sold some 13,000 contracts, increasing their overall bearish position to 65,000-plus.

Next Tuesday, USDA will issue its February supply-demand update. There is a possibility the government tabulators will increase domestic ending stocks. Then on Thursday, Feb. 12, the NCC will release its 2026 acres membership survey. Although not an official government report, nonetheless, it will be the first fundamental look at the potential for 2026.

Crude oil is lower again Friday, ahead of the U.S.-Iran talks. Both countries agreed to hold talks in Oman today amid heightened tensions as the U.S. builds up military forces in the Middle East. Regional nations are hoping to avoid a military confrontation that many fear could escalate into a wider war and disrupt the flow of oil.

Chart support for March cotton stands at 61.25 cents and 60.60 cents, with resistance around 62.57 cents and 63.70 cents. Friday morning’s estimated volume is 22,730 contracts.

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