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DTN Morning Cotton Commentary 02/18 06:46
Cotton Inches Higher
The cotton market is somewhat higher Wednesday morning, influenced by
certain recovering outside markets, as well as the continued preparations for
March cotton's imminent delivery.
Keith Brown
DTN Contributing Cotton Analyst
The cotton market is somewhat higher Wednesday morning, influenced by
certain recovering outside markets, as well as the continued preparations for
March cotton's imminent delivery.
This week, China will celebrate the Lunar New Year holidays. Most business
activities may be slowed or shuttered altogether.
Thursday and Friday, USDA will hold its annual Ag Outlook Forum, presenting
certain ten-year projections for U.S. agriculture. In referencing cotton, the
agency noted the market year average price for upland cotton fluctuates during
the projection period, starting at 65 cents per pound in nominal terms in
2026-27 before rising to 69 cents by 2030-31 where it remains for several years
before slipping to 68 cents in the final several years of the projection. The
U.S. mill use remains near the lowest levels of the past century as increased
competition from foreign manufacturing of cotton and synthetic fibers, such as
polyester, has reduced U.S. mill use significantly since the late 1990s. Mill
use is projected to decline during the projections, from 1.65 million bales in
2026-27 to 1.55 million bales from 2028-29 forward. U.S. upland cotton exports
will rise 10.4% from 12.5 million bales in 2026-27 to a projection period high
of 13.8 million bales in 2035-36.
Weekly export sales will be delayed until Friday due to the observance of
Monday's Presidents Day holiday. Last week saw combined seasonal sales nearing
285,000 bales, off some 8%, while shipments were 188,600, down 20%. The report
will be out at 8:30 a.m.
The delivery process for March cotton starts next Monday. Any producer tied
to the March contract must either flatten or roll by this Friday, Feb. 20, to
avoid the delivery process. Current open interest for spot March is 41,005
contracts.
Chart support for July cotton stands at 65.10 cents and 64.45 cents, with
resistance around 66.20 and 66.50 cents. Wednesday morning's estimated volume
is 13,207 contracts.
Keith Brown can be reached at commodityconsults@gmail.com or by calling
(229) 890-7780.
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