Cotton Sets Back

Ahead of Friday options expiration, spec fund rolling, next week’s WASDE, and eventual delivery, December cotton is very much on the defensive. In addition to those direct and unsettling cotton fundamentals, there are concerns with the legal challenge of the Trump tariffs, as well as an unsure trade agreement with China. 

As mentioned, options on the December contract will expire at the close Friday 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 in the face of a continued government shutdown. On the last published 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 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 U.S. dollar is on track for a modest weekly gain. Traders are trying to balance the Federal Reserve’s recent hawkish tilt on interest rates versus economic and labor concerns.

Meanwhile, Chinese exports unexpectedly fell in October. It was her steepest drop since February. Traders sensed there was a tremendous push to frontload U.S. goods to dodge tariffs.

Daily chart support for December cotton stands at 63.70 cents and 63.00 cents, with resistance at 65.00 cents and 66.00 cents. Friday morning’s estimated volume is 23,030 contracts.

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