Cotton Finally Awakens

The cotton market is triple-digits higher Monday morning as traders are preparing for the upcoming Trump/Xi trade meeting. There is likely some advance net buying, but also short-covering, from the massive bearish position of the speculative funds. In addition, the U.S. dollar is lower.

Last Friday, the CFTC issued updated Commitments of Traders data. That tally showed speculative funds had bought-in nearly 6,200 contracts, reducing their net-short position to 66,764. Their record bearish carry stands at 81,345 contracts.

The Climate Prediction Center revealed 88% of the U.S. cotton planted area is suffering some form of drought. The current 6- to 10-day outlook has below- to much-below chances for rain for the entirety of the Cotton Belt, as well as above- to much-above temperatures.

This week, traders will see various economic reports and events, including retail sales, housing starts, the meeting of the Federal Reserve, and weekly export sales.

Crude oil is higher Monday morning as the Trump administration ramps up pressure on allies to help safeguard the Strait of Hormuz. Both global contracts, Brent and WTI, have surged more than 50% over the past month, reaching their highest levels since 2022, as shipping traffic through the Strait of Hormuz has been severely disrupted.

Chart support for July cotton stands at 68.30 cents and 67.85 cents, with resistance around 69.55 cents and 70.00 cents. Monday morning’s estimated volume is 39,278 contracts.

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