Cotton Inches Higher

Overnight, ICE cotton continued to set higher price gains, as the market posted its fourth consecutive positive close, as well as nailing its seventh higher close of the last eight sessions, and the 12th higher close of the last 14 sessions for a two-week increase of nearly 750 points. Moreover, the December 2027 contract hoisted a new contract high close. Traders are seeing the deepening drought situation, as well as being mindful of the Middle East conflict.

USDA reported that 7% of the U.S. crop is planted. That compares with the five-year average of 7%. Texas is 11% seeded compared to 12%, but Georgia, where the drought is most acute, is 1% planted and the five-year average is also 1%.

This Thursday, traders will see a new round of export sales from USDA. Last week’s data showed net weekly sales were 319,000 bales, down 14%, while shipments were 342,000 bales off 4%.

First notice day for the May contract is April 24. Its delivery period runs through May 6.

Also, on Thursday and this Friday, traders will see fresh retail sales data and updated housing starts numbers. Both of those reports reflect a large portion of domestic demand for the cotton industry.

Crude oil is lower today as the International Energy Agency forecast that “demand destruction will spread” amid growing supply scarcity and higher average due to the U.S./Iran war. The conflict has already led to the greatest disruption to oil supply in history, according to the IEA, and the largest ever monthly spike in prices during March.

Chart support for July cotton stands at 75.60 cents and 74.70 cents, with resistance around 78.20 cents and 79.00 cents. Tuesday morning’s estimated volume is 32,310 contracts.

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