Cotton condition ratings have declined in the most recent week. The portion of the crop rated good-to-excellent declined to 44% from 47% the prior week. (A year ago 44% of the U.S. crop was rated good-to-excellent.) Perhaps more significantly, the portion of the crop rated poor-to-very poor increased noticeably, to 24% from just 17% the week before. (A year ago, 18% of the U.S. crop rated poor-to-very poor for the same week.)

The gap in crop maturation widened a bit in the most recent week. Just 51% of the crop is squaring; 12 pts behind the 5-year average. A week ago, the gap was only 8 pts, at 37% vs. 45% on a 5-year average. Ditto for boll setting. Just 10% of the crop has set bolls, 8 pts behind the 5-year average. A week ago it was a 5 pt shortfall; 6% vs. 11% on a 5-year average.

In international news however, itΆs not supportive. Analysts are expecting USDA to increase its global production estimate in ThursdayΆs July WASDE report. I also expect a slight increase in the U.S. production estimate will be part of that, due to planted acreage coming in above March intentions.
HereΆs a look at December cotton from a technical perspective, after todayΆs close:

The technical picture is simply not very conclusive. Daily trading ranges are simply widening, creating a short-term pattern of new highs AND new lows, neither more impressive than the other.

And repeating from last week, cotton finished the month of June still caught in a broad sideways trading range on the monthly chart. The June 28th Acreage report showed an increase in acres planted from March intentions; normally bearish. But prior to release the average trade estimate was for a bigger increase, so futures actually worked higher this week. HereΆs the monthly chart now that JuneΆs high, low and close has been added:

A big reason for this broad sideways action is the huge uncertainty posed globally by China and what it will do with its enormous stockpiles said to be in “reserve”, but now totally more than 14 monthsΆ usage for that country! If, as Chinese textile officials reported two weeks ago, Beijing decides to unleash stocks into the market and support farmer income with direct subsidies, that would be very bearish and almost surely drive futures below that support line just under 80 and down towards 70 or lower.

No change in advice, but catch-up sales are recommended.