August 20, 2021
By Keith Brown, DTN Contributing Cotton Analyst
The cotton market ended a bit higher as outside selling pressure, so prevalent on Thursday, abated Friday. Specifically, the dollar was a shade lower, while the Dow Jones was moderately higher. Cotton had become slightly oversold, having tumbled from Tuesday’s high of 96.71 cents to Friday’s low of 91.80 cents. Thus, heading into the weekend, there was a certain amount of position squaring done by traders.
To reiterate, Friday afternoon the CFTC will release its traders position report. The key group within that data are the managed-money funds. They carry the reputation of having the most cash, thus they often set the tone and direction for the general market. Currently, they are thought to be excessively net long, suggesting a correction of some measure could happen on Monday/Tuesday.
Monday, USDA will update the condition of the 2021 crop. Of late, the growing confusion among traders relates how the government tabulators dramatically reduced production on the August WASDE, at the same time they were consistently reporting an upbeat crop. Also next week, the export sales report and second quarter GDP will be out of Thursday.
A quick glance at the tropics shows Hurricane Grace will likely slam into Mexico, while Tropical Storm Henri will hit the U.S. Northeast. However, another disturbance is now blowing off the African/Sahara coast and will likely form something.
In a market summary, December cotton finished some 1.22 cents lower this week but up 3.71 cents on the month and 19.40 cents higher on the year.
For Friday, December cotton settled at 93.10 cents, up 0.34 cent, March ended at 92.26 cents, plus 0.31 cent and December 2022 ended at 82.95 cents, 0.16 cent higher; estimated volume was 21,588 contracts.