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Weekly cotton market review 11/23/2020.

Weekly cotton market review 11/23/2020.

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TECHNICAL ANALYSIS OF COTTON

Last week, ICE U.S. cotton futures closed sharply higher at $72.96 cents per pound.
Hope for a vaccine is fuelling the markets, and Pfizer and Moderna announced very encouraging results. Many countries, such as the United States, Germany, Spain, and others, are already preparing vaccination campaigns. The pandemic continues unabated, with more than 58 million cases worldwide and more than 1.382 million deaths . The United States is the most affected country with more than 256,000 deaths and more than 12 million cases.
The hope of a vaccine, as well as the prospects of a massive stimulus package, is driving the markets. The dollar is still low and in a downward trend, the DXY closes at 92.392.
Total cash transactions are 395734 bales this week compared to 339891 bales last week, an increase of 55843 bales this week compared to 22630 bales last week and 36236 bales at the same time last year.
The weather was particularly dry and sunny last week in the U.S. cotton belt.
-In the Southeast, harvesting activities progressed at a good pace. In the lower part of the southeast, there continues to be a loss in yield and quality due to moisture this fall. Harvest is 71% complete in Alabama, 61% complete in Georgia, 59% complete in N and S Carolina, and only 40% complete in Virginia, which is well below the five-year average.
-In the Delta, field activities progressed rapidly and under good conditions. Producers reported that yields were slightly below expectations, but were generally satisfied. Harvest was 95% complete in Arkansas, 78% complete in Missouri and Tennessee, 97% complete in Louisiana and 91% complete in Mississippi. Progress is finally close to the five-year average despite repeated hurricanes.
-In Texas, ginning activities continued. Ginning is a post-harvest operation that consists of separating the fiber and seeds from the cotton .
ICE US cotton inventories increased to 1,18394 bales, above the five-year average.

WEATHER IN THE UNITED STATES

The hurricane season in the North Atlantic is officially underway until November 30, and the U.S. cotton harvest is still underway. Rainfall in October was higher than normal, with more than 200 mm falling in some areas of the Southeast and Delta particularly affected by hurricanes Delta and Zeta. Last week, the weather remained dry and sunny throughout the cotton belt. According to the NHC , a disturbance is underway between Bermuda and the Bahamas and is expected to move northeast with less than a 20% chance of becoming a tropical phenomenon. Rainfall will be expected this week in the Delta from mid-week and also in the Southeast.

ICE US CERTIFIED COTTON STOCKS

ICE stocks of full-season cotton increased to 1,18394 bales from 9,36331 bales the previous week. Stocks are above the five-year average for the same period.

THE DOLLAR

The DXY index representing the Dollar against a range of foreign currencies closed last week down to 92.392, and the trend is still bearish . Joe Biden , who will be invested on January 20, spoke of a $3 trillion support plan. Forex traders are anticipating an increase in the money supply. Treasury Secretary Steven Mnuchin has called on the FED to return unused funds from emergency aid programs for the coronavirus crisis. The FED has decided to do so, although it considers this decision premature. Last week, this did not cause much movement in the currency market, which remained relatively calm.
A low dollar is generally favorable to the dollar-denominated commodity markets.

COMMITMENTS OF TRADERS

The weekly COT ( Commitments of Traders ) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The speculative net position on the cotton futures markets is down this week to 62.138 K instead of 66.191 K.

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