By admin       2018-10-30

December cotton opened higher Sunday night, quickly traded 0.100 cents up, but then fell back to unchanged, then to even lower levels. We saw no fundamental reason for this quick burst, but the end-of-the-month is fast approaching. There is no question the month of November, with its midterm elections, its supply and demand report, and the G20 meeting, potentially holds the key to undo cotton’s bullish lock. However for this week, the market will focus on Monday afternoon’s weekly crop condition/harvest data, Thursday’s weekly sales and exports, and Friday’s always important monthly jobs data. Regarding those three events, last week the crop approached the halfway mark of harvest. Unfortunately, however, with steep losses in the Southeast, harvest may actually conclude sooner than normal. The middle item — sales and exports — we are anticipating another dismal showing. One reason is the continuing trade war with China, while the other is that harvest is slowly but surely filling cotton’s pipeline. Thus, buyers can afford to wait to see what quantity and quality will be available. As far as the jobs data, a strong number would reflect strong economic growth, which should translate into more demand for domestic textiles, beside the inflationary possibilities to the U.S. economy. Naturally, one eye of cotton will be trained on the Dow. Last week, the volatility of the Dow scared off many would-be buyers of commodities, including cotton. To that end, the latest Commitment of Traders data (Oct. 23) indicates noncommercial traders are net-long some 56,100 contracts, which is up 900 for the week. Index funds held a net-long position of 82,700 contracts, up 1,300 positions. Overall, open interest seems to be stabilizing suggesting the automatic selling of rallies by speculators is ending.

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