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DTN Morning Cotton Commentary 04/25 07:50
Cotton Market Appears Too Weak to Recover
Even after cotton's excessive and counter-seasonal meltdown, the market
appears too weak to recover.
Keith Brown
DTN Contributing Cotton Analyst
Even after cotton's excessive and counter-seasonal meltdown, the market
appears too weak to recover. Continued selling by the funds, as well as panic
fixations by growers are affecting the market like a millstone around its
"neck". Going forward, traders will see GDP numbers today, as well as
exports-sales, followed by Friday's commitment-of-Traders update from the CFTC,
as then the PCE inflation report.
USDA released its weekly exports-sales report with the following highlights:
Net sales of Upland totaling 177,100 RB for 2023/2024 were up 21% from the
previous week and 73% from the prior 4-week average. Increases were primarily
for China (94,700 RB, including decreases of 500 RB), Pakistan (26,800 RB,
including decreases of 100 RB), Vietnam (14,200 RB, including 100 RB switched
from Japan and decreases of 1,000 RB), Turkey (9,700 RB), and Taiwan (5,500
RB). Net sales of 65,700 RB for 2024/2025 were primarily for China (22,000 RB),
Honduras (12,100 RB), Turkey (11,000 RB), Mexico (10,000 RB), and Guatemala
(4,900 RB). Exports of 261,700 RB were down 2% from the previous week and 18%
from the prior 4-week average. The destinations were primarily to China (99,800
RB), Pakistan (39,100 RB), Turkey (27,000 RB), Vietnam (24,900 RB), and
Bangladesh (24,600 RB). Net sales of Pima totaling 12,500 RB for 2023/2024 were
up noticeably from the previous week and up 94% from the prior 4-week average.
Increases were primarily for Vietnam (5,200 RB), China (4,500 RB), India (2,300
RB, including decreases of 300 RB), Guatemala (200 RB), and Germany (100 RB).
Exports of 10,100 RB were up 73% from the previous week and 29% from the prior
4-week average. The destinations were primarily to China (3,800 RB), India
(3,700 RB), Peru (1,300 RB), Turkey (800 RB), and Pakistan (400 RB).
The U.S. Drought Monitor was updated today but remains the same with 9% of
the U.S. cotton area being termed "droughty". For context, the Monitor's prior
reading showed some 9% of U.S. production area as being in the drought
category, versus the 40% reading of one year ago, and 55% drought two years ago.
Real gross domestic product was reported at 1.6%, less than expected.
Estimates among traders and economists were calling for a 22.4% number. This
worst total could influence the Federal Reserve thinking about monetary policy
and what decisions they come to regarding the outlook for interest rates.
For today, chart support for July Cotton stands at 8030 and 7980, with 8290
and 8385 as resistance. This morning's estimated volume stands at 7,038
contracts.
Keith Brown can be reached at commodityconsults@gmail.comor by calling (229)
890-7780.
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