The bulls posted their second consecutive weekly win, with the ICE Dec contact picking up 59 points, finishing at 82.22; however, Dec was a 737 point loser for Aug. The Dec – Mar spread weakened on the week, but remains at far less than full carry at (36) points.

The market again found support this week just above its recent lows. The latest on-call report from CFTC evinces that mill fixations of outstanding basis purchases have continued to lend support to our market. Further reductions in open interest against the Dec contract have continued to convey the market’s overall risk-off attitude. Too, the market reacted positively to the recent tentative US – Mexico trade agreement and the likelihood that a US – Canada agreement is nearing completion.

Weather continues to be a potential issue in the North Delta, with locally heavy rains causing isolated problems, despite overall excellent conditions in the region. Like the Southeast, the most troubling potential issue is rain on partially open bolls leading to boll rot, but the 5-day forecast looks favorable for drying and opening.

Demand for US cotton for export increased somewhat over the most recent sales period. We think that the recent religious holiday associated with the Muslim faith likely affected sales figures put forth this week. However, China continues to be a major purchaser of US cotton.

Total export sales the 2018/19 MY for the week ending Aug 23 were modestly lower Vs the previous sales period while shipments were modestly higher at approximately 161K (~50K to China) and 175K RBs, respectively. Sales were ahead of the weekly pace required to match the USDA’s export projection; total sales against the 2019/20 MY stand at around 1.43M 480 lb bales.

We are projecting 2018/19 exports at 16M 480lb bales.

For producers, this week’s advice remains similar to last week’s:  Consider fixing cotton at or above 85, but go into harvest with free cotton to sell on rallies that approach 90 or if basis improves for higher grades. Important stories to watch in the next few weeks include progress on trade talks, the likelihood of a farm bill by months end, and the September WASDE.

Given that this is our last Agfax column, we’d be remiss if we didn’t repeat the best marketing advice we can give:  the option pit is your friend. Hedging a crop with options is the single most effective thing you can do to reduce risk and improve the odds of being in the game when profit potential presents itself. If you’re not using options now, learn how to use them to hedge and/or market your 19 crop. You’ll be glad you did, and so will your banker.

For next week, the standard weekly technical analysis for and money flow into the Dec contract remain bearish, but the market also remains in something of a technically oversold condition. A significant amount of physical support likely remains under the current market.

Further out, Farm Futures magazine has projected, via its preliminary survey, 2019 area committed to cotton of more than 13.7M acres, which is where we now believe 2018 planted area to be. As the winter wheat planting season approaches across the southern US amid a bear soybean market, we can envision a plausible scenario for 2019 US cotton acreage sown to cotton to be significantly above 14M acres.