Weekly cotton market review 12/07/2020.
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TECHNICAL ANALYSIS OF COTTON
Last week, ICE U.S. cotton futures closed lower at $71.57 cents per pound.
ICE U.S. cotton stocks were down to 101220 bales. Total cash transactions were 531144 bales this week compared to 479062 bales last week, an increase of 52082 bales this week compared to 83328 bales last week and 53680 bales at the same time last year. Demand has been good, with China, Pakistan and Vietnam showing interest.
-In the Southeast, a cold bottom passed through the region over the weekend, and many areas experienced their first major frost. Alabama, Florida, Georgia experienced up to 7 centimeters of rain, interrupting work, then resuming where the soils were sufficiently firm. Harvest was 80% complete in Alabama and Georgia, 74% in North Carolina, 77% in South Carolina, and 62% in Virginia, where harvest was late due to wet conditions.
-In the Delta, a cold front resulted in lower temperatures and low precipitation in the region during the week. Up to 5 cm of precipitation was reported during this period, with light snow in the northern regions. Field activities were for the most part completed. A few growers reported disappointing yield results and/or grade reductions, which they attributed to wet weather throughout the harvest season, resulting in boll rot in some of the areas. Harvest was 100% complete in Arkansas, 95% in Missouri and Tennessee, 100% in Louisiana and 98% in Mississippi.
-In Texas, intermittent rains were reported in parts of southern Texas. Ginning is continuing in the coastal zone.
Internationally, last week was marked by the sharp fall of the dollar. The DXY, after breaking through the 92 resistance, is heading towards the 90's, and the Euro was close to $1.22 after disappointing U.S. empoi figures. Hopes for a vaccine, the FED reaffirming that the priority remains to support the economy, and the joint Democratic and Republican proposal for a $908 billion emergency plan are driving equity markets. Curiously, commodities as a whole did not benefit from the dollar's decline.
Discussions between the British and the Europeans continue as the December 31 deadline approaches in the hope of reaching a post-brexit trade agreement. Regarding the pandemic update, we have just passed the 67 million cases worldwide, with more than 1.537 million deaths. The United States continues to be the most affected country with more than 282,000 deaths and more than 14.7 million cases. Italy passes the 60,000 death mark, and the United States is facing a spectacular rebound of the epidemic with more than 230,000 cases Saturday, in 24 hours. The United Kingdom, the first country to license Pfizer vaccine, begins vaccination Tuesday.
WEATHER IN THE UNITED STATES
The hurricane season in the North Atlantic is officially over, and the U.S. cotton harvest is also coming to an end. Rainfall in October was above normal, but lower than normal in November. Last week, many areas experienced their first significant frost of the season. Slightly above normal rainfall was reported last week in parts of the southeast, south delta and southeast Texas.
ICE US CERTIFIED COTTON STOCKS
ICE cotton stocks at the height of the harvest season were down to 101220 bales for 115929 last week. Stocks are above the five-year average for the same period.
THE DOLLAR
The DXY index representing the Dollar against a range of foreign currencies closed last week down to 90.701, and the trend is still bearish. The DXY after breaking the 92 resistance, plunged last week and is on its way to the 90. The Euro rose as high as 1.2175 on Friday after very disappointing U.S. employment figures. As a backdrop, Powell said the priority remains to support the economy, and Democrats and Republicans are working together on a $908 billion emergency support proposal as a first step. For later, once the Joe biden administration is in place, work for a more substantial plan. Forex traders are anticipating an increase in the money supply.
A low dollar is generally good for dollar-denominated commodity markets.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The speculative net position on the cotton futures markets is down this week to 70.799 K instead of 73.111 K.
TECHNICAL ANALYSIS OF COTTON
Last week, ICE U.S. cotton futures closed lower at $71.57 cents per pound.
ICE U.S. cotton stocks were down to 101220 bales. Total cash transactions were 531144 bales this week compared to 479062 bales last week, an increase of 52082 bales this week compared to 83328 bales last week and 53680 bales at the same time last year. Demand has been good, with China, Pakistan and Vietnam showing interest.
-In the Southeast, a cold bottom passed through the region over the weekend, and many areas experienced their first major frost. Alabama, Florida, Georgia experienced up to 7 centimeters of rain, interrupting work, then resuming where the soils were sufficiently firm. Harvest was 80% complete in Alabama and Georgia, 74% in North Carolina, 77% in South Carolina, and 62% in Virginia, where harvest was late due to wet conditions.
-In the Delta, a cold front resulted in lower temperatures and low precipitation in the region during the week. Up to 5 cm of precipitation was reported during this period, with light snow in the northern regions. Field activities were for the most part completed. A few growers reported disappointing yield results and/or grade reductions, which they attributed to wet weather throughout the harvest season, resulting in boll rot in some of the areas. Harvest was 100% complete in Arkansas, 95% in Missouri and Tennessee, 100% in Louisiana and 98% in Mississippi.
-In Texas, intermittent rains were reported in parts of southern Texas. Ginning is continuing in the coastal zone.
Internationally, last week was marked by the sharp fall of the dollar. The DXY, after breaking through the 92 resistance, is heading towards the 90's, and the Euro was close to $1.22 after disappointing U.S. empoi figures. Hopes for a vaccine, the FED reaffirming that the priority remains to support the economy, and the joint Democratic and Republican proposal for a $908 billion emergency plan are driving equity markets. Curiously, commodities as a whole did not benefit from the dollar's decline.
Discussions between the British and the Europeans continue as the December 31 deadline approaches in the hope of reaching a post-brexit trade agreement. Regarding the pandemic update, we have just passed the 67 million cases worldwide, with more than 1.537 million deaths. The United States continues to be the most affected country with more than 282,000 deaths and more than 14.7 million cases. Italy passes the 60,000 death mark, and the United States is facing a spectacular rebound of the epidemic with more than 230,000 cases Saturday, in 24 hours. The United Kingdom, the first country to license Pfizer vaccine, begins vaccination Tuesday.
WEATHER IN THE UNITED STATES
The hurricane season in the North Atlantic is officially over, and the U.S. cotton harvest is also coming to an end. Rainfall in October was above normal, but lower than normal in November. Last week, many areas experienced their first significant frost of the season. Slightly above normal rainfall was reported last week in parts of the southeast, south delta and southeast Texas.
ICE US CERTIFIED COTTON STOCKS
ICE cotton stocks at the height of the harvest season were down to 101220 bales for 115929 last week. Stocks are above the five-year average for the same period.
THE DOLLAR
The DXY index representing the Dollar against a range of foreign currencies closed last week down to 90.701, and the trend is still bearish. The DXY after breaking the 92 resistance, plunged last week and is on its way to the 90. The Euro rose as high as 1.2175 on Friday after very disappointing U.S. employment figures. As a backdrop, Powell said the priority remains to support the economy, and Democrats and Republicans are working together on a $908 billion emergency support proposal as a first step. For later, once the Joe biden administration is in place, work for a more substantial plan. Forex traders are anticipating an increase in the money supply.
A low dollar is generally good for dollar-denominated commodity markets.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The speculative net position on the cotton futures markets is down this week to 70.799 K instead of 73.111 K.
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