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DTN Morning Cotton Commentary 05/04 07:18
Cotton Starts Week Lower
The cotton market is somewhat off its bullish game Monday morning as the
renewal of war drums in the Middle East is casting fears across many trading
arenas.
Keith Brown
DTN Contributing Cotton Analyst
The cotton market is somewhat off its bullish game Monday morning as the
renewal of war drums in the Middle East is casting fears across many trading
arenas. The Dow and gold are lower, while WTI crude oil and the U.S. dollar are
significantly higher. Besides those geopolitical events, traders will also
focus on direct cotton fundamentals for price influences.
Last Friday, the CFTC updated its Commitments of Traders information. The
data showed the managed-money funds had bought-in some 3,800 positions,
increasing their net-long carry to 38,355 contracts.
President Trump and Xi are scheduled to meet on May 14 in Beijing to discuss
trade and geopolitical topics. China wants the assurance of uninterrupted
energy supplies, while the U.S. is looking to increase agricultural exports.
The US weekly Drought Monitor showed no improvement last week, with
approximately 98% of U.S. cotton production still experiencing drought as of
April 28. A year ago, about 21% was in drought.
Crude oil prices are higher Monday amid President Trump's announcement to
free ships that have been trapped due to the closure of the Strait of Hormuz.
Still, with lingering tensions between Tehran and Washington, some analysts are
suggesting a renewal of fighting will take place. Currently, the Hormuz Strait
continues to face a blockade.
Chart support for July cotton stands at 82.00 cents and 81.15 cents, with
resistance around 85.00 cents and 86.00 cents. Monday morning's estimated
volume is 16,960 contracts.
Keith Brown can be reached at commodityconsults@gmail.com or by calling
(229) 890-7780.
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