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Softs Report: Cotton
By: Jack Scoville | May 16, 2022

• COTTON

General Comments: Cotton was lower last week but rebounded from the lows of the week to close moderately lower as dry conditions in the western Great Plains continue. USDA estimated production for the coming year at 16.50 million bales and this was below trade expectations. Demand was also cut, but ending stocks were estimated at just 2.9 million bales for the new crop year, down from 3.4 million in the current crop year. USDA said that planted area was less than had been previously forecast due to the hot and dry weather in the western Great Plains. The trade is worried about Chinese demand due to the Covid lockdowns there. India will now try to increase imports as world and US Cotton is now lower cost to importers as import taxes have been removed, but prices for imported Cotton are still very high. Production of the next US crop is at risk now due to dry weather in general for the western Great Plains. China could be trimming imports due to Covid and is also closing down a number of cities as the Covid spreads through the nation. China has been buying even with the port closures and domestic difficulties caused by renewed Covid lockdowns.
Overnight News: The Delta will get isolated showers and above normal temperatures and Southeast will get isolated showers and above normal temperatures. Texas will have mostly dry conditions and above normal temperatures. The USDA average price is now 140.20 ct/lb. ICE said that certified stocks are now 1,100 bales, from 1,100 bales yesterday. ICE said that 0 notices were posted for delivery against May contracts and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in Cotton are mixed. Support is at 145.00, 142.10, and 140.70 July, with resistance of 148.70, 152.90 and 155.90 July.

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