Cotton Has Bearish Hangover Wednesday

In the post trade agreement — albeit a verbal one — window with China, most markets were lower Tuesday. Some of that negativity continues to affect Wednesday’s trading. A recent rise in the U.S. dollar, as well as China’s history of not fully honoring trade deals has many U.S. traders and farmers doubting her intentions.

This Friday, options on the December contract will expire at the close of the ICE futures. Their expiration will affect the market’s total open interest levels. 

USDA has announced it will release an updated crop report on Nov. 14, even if the shutdown continues. On the last WASDE, prior to the shutdown, USDA had increased the U.S. 2025 cotton crop to 13.22 million bales versus the previous 13.21 million bales.  

December cotton will enter its delivery on Nov. 21. Thus, all traders, except those intending to participate in the notice process, will have to liquidate or roll forward in time.

The 6- to 10-day weather outlook (Nov. 10-14) calls for above-normal temperatures for Texas and much below-average temperatures for the Delta and the Southeast. Rain-wise, Texas, the Delta, and the Southeast are facing below-normal opportunities.

Daily chart support for December cotton stands at 64.70 cents and 64.00 cents, with resistance at 66.00 cents and 66.75 cents. Wednesday morning’s estimated volume is 16,230 contracts.

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