Higher Than Expected Yield Dampens Cotton Futures

The USDA reported this morning the US domestic cotton crop will be 1% larger than what was forecasted last month as harvest yields increase.  Cotton futures are sharply lower as a result of this revelation.

Last years cotton crop brought in just over 15.5M (480 lbs.) bales.  This years crop, which harvest began just last month, is expected to bring in just over 17.25M bales – a nominal increase that cotton futures is rejecting the current demand.

Kevin Riordan, director of research at Capital Trading Group in Chicago, stated today in technical terms the current cotton futures situation, “(Cotton futures) prices remain in a two week trading approximately  between 7250-7050.”  Riordan added, “Failures to hold the lower end should lead to a test of the next (cotton futures) support area of 6950 and then 6735.”

We are currently short cotton futures as of last night.  The trend is down and I expect further cotton futures weakness into this time next week.

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