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DTN Morning Cotton Commentary 07/02 08:19
Cotton Edges Higher on Weather
The cotton market remains higher Thursday morning as traders anticipate a
worsening weather situation for Texas.
Keith Brown
DTN Contributing Cotton Analyst
The cotton market remains higher Thursday morning as traders anticipate a
worsening weather situation for Texas. On the whole, scant rain is expected for
West Texas and the Texas Panhandle. As it stands, less than two tenths is
expected around the countryside. The Texas crop will likely see deteriorating
numbers on the upcoming weekly crop condition report.
USDA reported decent export sales Thursday, even as the old crop is quickly
giving way to the 2020/2021 new crop. The following text is taken directly from
USDA's report.
Net sales of 67,300 RB for 2019/2020 were down 35 percent from the previous
week and 54 percent from the prior 4-week average. Increases primarily for
Vietnam (50,200 RB, including 1,800 RB switched from China and 500 RB switched
from South Korea), China (15,700 RB, including decreases of 26,500 RB),
Bangladesh (4,100 RB, including decreases of 100 RB), Indonesia (3,300 RB,
including 300 RB switched from Japan), and Taiwan (1,000 RB), were offset by
reductions primarily for Pakistan (5,100 RB), South Korea (500 RB), Mexico (500
RB), Japan (400 RB), and Thailand (400 RB). For 2020/2021, net sales of 246,200
RB reported for China (246,500 RB) and Japan (100 RB), were offset by
reductions for Mexico (400 RB). Exports of 277,000 RB were down 12 percent from
the previous week and 7 percent from the prior 4-week average. Exports were
primarily to China (105,300 RB), Vietnam (50,600 RB), Turkey (45,000 RB),
Pakistan (27,600 RB), and Bangladesh (21,200 RB). Net sales of Pima totaling
4,700 RB were up 12 percent from the previous week and 44 percent from the
prior 4-week average. Increases were primarily for India (2,600 RB), Turkey
(400 RB), Pakistan (400 RB), Honduras (300 RB), and El Salvador (300 RB).
Exports of 4,400 RB were down 54 percent from the previous week and 45 percent
from the prior 4-week average. The destinations were primarily to India (2,000
RB), Turkey (700 RB), Japan (500 RB), Thailand (400 RB), and Bangladesh (300
RB).
Also Thursday morning, the Labor Department issued a very strong jobs
report. Non-farm jobs for June were 4.8 million, compared to May's 2.50 million
and expectations of 2.90 million. The unemployment rate fell to 11%. Dow Jones
futures reacted with a swift 400-point upside move.
All markets are closed Friday for the observance of Independence Day.
Trading for cotton futures will resume Sunday night, and this commentary will
return Monday morning.
For Thursday, support for December cotton 61.60 cents and 61.20 cents, with
resistance at 64.00 cents and 65.80 cents. Current volume stands at 5,440
contracts.
Keith Brown can be reached at commodityconsults@gmail.com or by calling
(229) 890-7780.
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