Price action: July cotton fell 126 points to 84.79 cents, nearer the session low.
Fundamental analysis: Cotton futures extended Friday’s weakness despite crude strength after top crude exporter Saudi Arabia pledged to cut production by an additional 1 million barrels per day from July. The U.S. dollar extended last week’s gains overnight but turned lower following a weaker-than-expected reading of the May ISM services index, which fell from 51.9 in April to 50.3 last month, reflecting the second lowest reading of the expansion after last December’s decline to 49.2. This comes after last Friday’s jobs report which indicated healthy service employment. The next Consumer Price Index (CPI) reading may influence the Fed’s decision on whether to increase rates at this month’s meeting.
Frequent rains continue in key cotton-growing areas, with some flooding occurring in West Texas, southwestern Oklahoma and the Texas Panhandle during the weekend, according to World Weather, which will cause further delays to planting while inducing additional increases in soil moisture. The forecaster indicates these areas will receive additional rain through Wednesday, with some additional flooding possible in the Panhandle where rain will be greatest.
Technical analysis: July cotton futures lost technical ground today with bears grasping a close below initial support of 85.31 cents. Initial support will now lie at 84.58 cents, then at the 10-, 20-, 100- and 40-day moving averages at 83.95, 83.54, 83.23 and 82.55 cents, respectively. Upward momentum, however, will be stifled initially at today’s failed support of 85.31 cents, then at 86.24, 86.97 and 87.90 cents.
What to do: Market recommendations are available to Pro Farmer subscribers only. Start a free trial.
Hedgers: Market recommendations are available to Pro Farmer subscribers only. Start a free trial.
Cash-only marketers: Market recommendations are available to Pro Farmer subscribers only. Start a free trial.
