By Keith Brown, DTN Contributing Cotton Analyst
For most of its Wednesday session, cotton traded both sides of Tuesday’s close. However, late in the day, the market began to gather a bit of a bullish steam and finished higher. Traders are well aware of the USDA’s forthcoming reports. First will be the weekly export-sales Thursday morning, followed by Friday’s April supply/demand report. Both reports will be key to the psyche of the market. For export-sales, it’s a chance at redemption over last week’s poor showing, and for the supply/demand report, it is an obvious opportunity to lower the supply and increase the demand.
This time of year, weather is a top focus among traders. Towards this weekend, there will be a rain event coming across the U.S. Delta into the Southeast. Temperatures are expected to be below normal. Planting in Georgia begins in earnest in late April. Monday’s crop progress had the nation’s cotton crop at 6% planted versus 7% last year and compared to the five-year average of 5% seeded.
Chart-wise, some traders are saying as long as the huge technical turnaround of March 23 holds, “sold out” bullish speculators may feel the need to re-enter the market on the long side. At their highest concentration of position, certain managed-money funds were some net long near 80,000 contracts, while their latest CFTC count has them at roughly 54,000 contracts net long.
Wednesday, May cotton closed at 79.50 cents, up 0.28 cent, July settled at 80.84 cents, up 0.37 cent and December ended at 80.04 cents, up 0.63 cent; estimated volume was 44,542 contracts.