Cotton Market Posts New Highs Monday Morning

The cotton market is posting new highs for the move, somewhat driven by the volatile action of surrounding markets. Over the weekend, the U.S./Iranian peace talks failed, and the result is sharply higher energies.

Last Friday, the CFTC updated its Commitment of Traders information. Per last Tuesday’s close, the managed-money funds had net bought some 10,000 positions, reducing their net-short carry to some 2,020 contracts.

The weekly U.S. Drought Monitor showed some 95% of the U.S. cotton area in some form of drought. Specifically, Texas stands at 97%. The U.S. Climate Prediction Center has given El Nino a 61% chance of developing between May and June persisting through at least the end of the year.

The 6- to 10-day and 8- to 14-day forecasts (April 18-22) both show Texas with normal to slightly above-normal opportunities for rain, while the Southeast stands at below-normal chances. Temperature-wise, Texas looks to have slightly normal readings, with the Southeast pegged with much-above numbers.

Crude oil is surging higher this morning as the U.S. Navy prepares to impose a blockade on Iran’s ports after peace talks failed over the weekend. The U.S. Central Command said Sunday the military will blockade all maritime traffic entering and exiting Iranian ports on Monday at 10 a.m. EDT. It also added that the U.S. will not impede vessels transiting to and from non-Iranian ports.

Chart support for July cotton stands at 74.40 cents and 74.00 cents, with resistance around 76.00 cents and 76.50 cents. Monday morning’s estimated volume is 26,337 contracts.

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