From a technical point of view the market looks constructive, with the primary trend pointing higher and new spec money flowing in.
From a fundamental point of view US prices are out of line when compared to other origins, although the US balance sheet is tighter than that of its competitors. Nevertheless, it seems that the tail is wagging the dog at the moment, but the trade has little power to counter that until the next big notice period rolls around, which isn’t until late November.
The U.S. 2020/21 cotton projections show lower production, exports, and stocks compared with last month. Beginning stocks are 200,000 bales lower due to higher 2019/20 exports, but exports in 2020/21 are reduced 1 million bales as a 2-million-bale decline in projected output reduces exportable supplies. U.S. planted area is 1.5 million acres lower this month, as indicated in the June 30 Acreage report.
Cotton eases from 4-month peak ahead of WASDE report
July 9 (Reuters) - ICE cotton futures edged lower having hit a four-month high on Thursday ahead of the U.S. Department of Agriculture’s (USDA) monthly supply-demand report, which is expected to show a decline in production of the natural fiber.
The cotton market finished slightly lower Thursday amid a strong export number and continued forecast of a hot and dry Texas. Earlier in the session, New crop posted a very strong technical spike in response to a Chinese shipment, but halted “this side” of the 65.00-cent level. The stopping point occurred right about the 62% retracement level, as pulled from the January high to the April low.