Price action: December cotton rose 17 points to 68.25 cents and gained 26 points on the week.
5-day outlook: Cotton futures managed to trade remarkably well given a second straight day of notable selling across equities and crude oil futures, with heavy weakness in the U.S. dollar, which pushed to a four-and-a-half month low early on, certainly supporting the natural fiber. Global recession fears have resurfaced this week, with yesterday’s ISM manufacturing PMI and weekly unemployment claims, combined with today’s weaker-than-expected July jobs report reigniting concerns about the health of the U.S. economy. While a recession would likely affect consumer demand for cotton, multi-year lows in cotton are likely limiting seller interest at this juncture.
30-day outlook: USDA’s supply and demand updates on August 12 will gather market attention, along with U.S. weather as the growing season progresses. World Weather Inc. reports the southeastern states are a little too wet and will dry down briefly, but a tropical system next week may bring abundant to excessive rain to parts of Georgia, the eastern Carolinas and northern Florida. Meanwhile, the Delta will dry down beneficially, while net drying is expected for most of the Texas crop areas. Harvesting in Texas will advance well in the absence of rain. The forecaster notes soil moisture should support crops in most areas, though stress in the northern Blacklands and southern parts of West Texas will steadily increase.
90-day outlook: U.S. cotton sales will continue to be a focal point over the next several months, as it provides insight into the global economy. This week, USDA reported net upland cancellations of a whopping 1.086 million RB for 2023-24 for the week ended July 25, with cancellations primarily for China, Pakistan and Vietnam, however, new crop sales totaled 1.36 million RB, with those three countries noted as the top three purchasers. Exports during the week were reported at 129,900 RB, down 1% from the previous week and 11% from the four-week average.
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