Cotton Edges Lower on Exports, Jobs
Jun 02, 2023
The cotton market is slightly lower Friday as traders await the holiday delayed weekly Export Sales and Shipments report from USDA and the monthly jobs report.
The cotton market is slightly lower Friday as traders await the holiday delayed weekly Export Sales and Shipments report from USDA and the monthly jobs report. For the whole of this abbreviated week of trading, cotton has seesawed as traders continue to prepare for July cotton future's option expiration, as well as the end of the 2022/2023 season.
USDA Just released its weekly export sales report and its data is as follows:
"Net sales of 267,800 running bales (RB) for 2022/2023 were up noticeably from the previous week and up 44% from the prior four-week average. Increases primarily for China (221,700 RB, including decreases of 2,400 RB), Turkey (20,800 RB), Vietnam (13,700 RB, including 2,100 RB switched from South Korea and 700 RB switched from Japan), Bangladesh (5,300 RB), and Indonesia (3,800 RB, including 900 RB switched from Japan), were offset by reductions primarily for South Korea (2,100 RB), El Salvador (1,200 RB), and Ecuador (700 RB).
"Net sales of 76,600 RB for 2023/2024 were primarily for Turkey (43,500 RB), El Salvador (20,900 RB), and China (8,800 RB). Exports of 283,000 RB were up 5% from the previous week, but down 16% from the prior four-week average. The destinations were primarily to Turkey (56,200 RB), Pakistan (52,300 RB), Vietnam (48,700 RB), China (40,000 RB), and Bangladesh (23,300 RB).
"Net sales of Pima totaling 3,700 RB for 2022/2023 were up 12% from the previous week, but down 70% from the prior four-week average. Increases primarily for Egypt (1,500 RB), Vietnam (1,500 RB, including 1,000 RB switched from Hong Kong), and India (1,300 RB), were offset by reductions for Hong Kong (1,000 RB). Exports of 26,700 RB -- a marketing-year high -- were up 98% from the previous week and 52% from the prior four-week average. The destinations were primarily to India (13,100 RB), China (7,400 RB), Vietnam (4,100 RB), Pakistan (900 RB), and Peru (400 RB)."
The Labor Department issued its monthly jobs report. Expectations were calling for 180,000 new non-farm jobs for last month, but the number was 339,000. The results of Friday's report will likely influence the Federal Reserve's decision whether to pause or hike interest rates at its June 14 meeting
OPEC+ meets this weekend to formulate its oil policy. Some traders hoped to see additional reduced cartel production. In April OPEC+ announced a surprise cut of 1.16 million barrels per day, but the gains from that move have since been retraced and prices are below pre-cut levels.
The US Senate passed bipartisan legislation that lifts the government's $31.4 trillion debt ceiling last night. Supposedly, their action will avert what would have been a first-ever default. The Senate voted 63-36 to approve the bill that had been passed on Wednesday by the House of Representatives. The Dow is trading double-digits higher Friday morning as a result.
The 1- to 5-day forecast calls for heavy rains across the Texas Panhandle. The 6- to 10- and the 8- to- 14-day outlooks hold above-normal chances for precipitation. However, the more extended 90-day outlook shows above-normal temperatures, with normal to below-normal rains.
There are 14 days to the expiration of July options. The contract will enter delivery on June 26.
Friday's close-in support for July cotton stands at 80.40 cents and 79.65, with resistance at 82.00 and 82.75. Friday morning's estimated volume is 5,290 contracts.