Price action: December cotton rose 49 points to 73.52 cents and gained 370 points on the week.
5-day outlook: Cotton futures extended gains to mark a near three-month high close, despite a stronger dollar and general weakness across equities. However, this week’s half-point rate cut from the Federal Reserve bolstered sentiments of improved domestic demand for apparel this fall and into the holiday season. However, next week could bring some corrective selling amid near-term overbought conditions, but solid technical support should limit a hefty downside move.
30-day outlook: U.S. harvest weather will continue to prove noteworthy as harvest progresses in key production areas. World Weather Inc. reports conditions in West Texas remain good, though a few showers in the coming week will be welcome and beneficial for late season boll development. Meanwhile, drier weather has returned to the Delta this week and that will help crops improve after recent rain. Too much rain may have also occurred during the weekend in part of Alabama, southwestern Georgia and northwestern Florida, although situations should improve this week as drier weather resumes. Good harvest weather continued in the Texas Coastal end and the Blacklands crop continues to be rated favorably. On Monday, USDA reported 10% of the U.S. cotton crop was harvested, two points ahead of the five-year average.
90-day outlook: Fading cotton purchases from China, as noted in USDA’s weekly export data, will continue to be closely monitored as the marketing-year progresses. Persisting deflationary conditions in the country have had implications on demand for the natural fiber, combined with increasing trade ties with Brazil. This week, USDA reported net upland sales of 108,600 RB for the week ended Sept. 12, down 8% from the previous week and 23% from the four-week average, with Vietnam, Pakistan and India notching the top spots for purchases during the week. Meanwhile, exports dropped 40% from the previous week and from the four-week average, with India, Vietnam and China the top destinations.
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