Cotton falls as weather boosts production expectation

COTTON (NYBOT:CTV13)

General Comments: Futures moved lower. Growing conditions remain generally very good. Temperatures are warmer again in Texas, but some very beneficial precipitation has been seen in the last couple of weeks and production ideas are generally high. Conditions in Alabama, Mississippi, and Missouri are good after some big rains earlier in the growing season. Export sales have been on the weak side lately as the buy side of the market waits for prices to work lower. World production ideas are also high. Weather for Cotton still appears good in India, Pakistan, and China. Overall, it looks like futures have made some short term tops and can now slide lower into harvest. How low prices go will depend on the demand side of the market now. Traders will continue to watch the world economy for clues. US economics are general improving but remain somewhat mixed. China and Europe are having a tougher time right now and these trends might continue for the next few months.

Overnight News: The Delta and Southeast will see showers off and on all week. Temperatures will average near to above normal. Texas will see dry weather this week and maybe some showers in the north. Temperatures will average above normal. The USDA spot price is now 81.23 ct/lb. ICE said that certified Cotton stocks are now 0.152 million bales, from 0.160 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 85.00, 84.30, and 84.00 October, with resistance of 86.00, 86.50, and 87.00 October.

FCOJ (NYBOT:OJU13)

General Comments: Futures closed lower. No one wants to sell much with the most active part of the hurricane season just in front of them, but the market has stalled and created some liquidation pressure. The tropics remain quiet for now. The bulk of the tropical Atlantic is seeing some very dry conditions and wind shear. Both phenomena have accounted for the lack of any significant tropical storm development. Growing conditions in the state of Florida remain mostly good. Showers and storms are reported and conditions are said to have improved in almost the entire state. Ideas are that the better precipitation will help trees fight the greening disease. Temperatures are warm. Brazil is seeing near to above normal temperatures and mostly dry weather, and there are reports of stress to trees and the potential for lower production. Brazil should produce enough to remain the number one world exporter, but traders there are worried after some losses were reported in Sao Paulo due to the dry weather until now and the very cold temperatures seen a couple of weeks ago.

Overnight News: Florida weather forecasts call for some showers, but mostly dry conditions. Temperatures will average near normal.

Chart Trends: Trends in FCOJ are down with objectives of 135.00 September. Support is at 140.00, 139.00, and 137.00 September, with resistance at 145.00, 147.00, and 148.00 September.

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