Whew this has been a wild ride huh? Cotton is getting rowdy! Let’s talk about what is making this party rage on.
Well first there was Harvey. It hit SE Texas where harvest was about 70% complete. Right before Harvey hit that Saturday we saw cotton break down on Friday. We were all kind of like “say huh?” How are we breaking down ahead of a hurricane? The week following we began to grind higher. We tried multiple times to hold .70, but when we got close we would break back down. Once we finally closed above .70 we really started to hit the gas. We got to .71 fairly quickly then we hit 71.50 (200 DMA) which was important technically. On the ground the current estimated cotton crop loss is 400-500k bales, but that is just the last report I saw. **My heart goes out to all those affected by the storm. The rescue effort there is truly inspiring. A lot of kindness, class, and heart in that great state.
Now for the next move upward – We are still talking about Harvey, but now there is news of Irma. She is looking rather wicked. A category 5 currently that is predicted to hit Florida. After Florida she is predicted to possibly hit parts of GA, AL, SC, & others. These are all cotton states! Georgia has been a bit of a bright spot this crop year with near perfect conditions and a solid crop. Irma’s path could possibly wreak havoc there.
Additionally news broke Monday that China has banned trading firms from buying cotton from its national reserves during September. This sent the ZCE (China’s cotton exchange) up 4%. This adds an even more bullish tone to the narrative.
So all 3 of these factors are playing into the current rocket ride of cotton. Harvey began the upward momentum then Irma and the news from China sling shotted us to limit up.
Now for the Debbie Downer portion. We don’t know where Irma will hit. (Please keep those in the predicted path in your prayers.) If there is little to no impact then we could see Dec drop like 4 flats. Also, the USDA report on the 12th could also bring a bearish surprise.
So, there are a lot of unknowns out there. No one knows anything with certainty. Keep an eye on this market y’all, it is back to its drama queen ways and anything is possible. Feel free to contact me with questions or comments – firstname.lastname@example.org