Commodity-market-review

Weekly cotton market review 11/02/2020.

ICEUS:CT1!   COTTON NO. 2 FUTURES
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TECHNICAL ANALYSIS OF COTTON

Last week, ICE U.S. cotton futures closed lower at $68.90 cents per pound. The worsening health situation with a sharp increase in covid-19 cases in the U.S. and Europe has strongly impacted markets last week. With the magnitude of the 2nd wave, Europe is reconfirming itself, as is the case in Ireland, Czech Republic, France, Germany, England, Portugal, Austria, and countries such as Spain and Italy, and others are taking increasingly drastic measures, such as curfews, closing bars and restaurants, or limiting people in meetings. The United States is seeing a record number of covid cases in the run-up to the election.
Total cash transactions are 301,037 balls this season compared to 215,015 last season at the same time.
After Hurricane Delta, it was Zeta's turn last week to dump heavy rainfall in the Delta and the Southeast. Zeta caused extensive damage to trees, power lines and buildings. The national weather service reported that more than 2.5 million people were without power in the storm's path. The storm brought rainfall of 5 to 10 centimeters in Louisiana, Mississippi, Alabama, and Georgia. The National Weather Service issued river flood warnings. Harvesting operations, which had begun to expand, were again at a standstill due to bad weather in some areas.
ICE US cotton stocks rose to 45,898 bales, above the five-year average.
In the United States, the US election is scheduled for tomorrow, November 3, and market tensions cannot be ruled out. Investors fear the possibility that Donald Trump will be declared a narrow loser and do not want to recognize the results, making the transition more complicated and delaying the vote on the long-awaited plan to support the US economy.

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. After Hurricane Delta, it was Zeta's turn last week to dump heavy rainfall in the Delta and the Southeast. Zeta caused extensive damage to trees, power lines and buildings. The national weather service reported that more than 2.5 million people were without power in the storm's path. The storm brought rainfall of 5 to 10 centimeters in Louisiana, Mississippi, Alabama, and Georgia. The National Weather Service issued river flood warnings. Cotton is particularly sensitive to rainfall at this time of year when the bolls are open. Moisture causes rotting and staining of the cotton fiber.

ICE US CERTIFIED COTTON STOCKS

ICE cotton stocks rose to 45,898 bales from 3,371 last week. Stocks are back above the five-year average over the same period.

THE DOLLAR

The DXY index representing the Dollar against a basket of foreign currencies closed last week up to 93.882. The 2nd epidemic wave is scaring the market and the Dollar seems to be playing its role as a safe-haven currency. The chances of a quick agreement on a plan to support the U.S. economy are now nil. We will have to wait now for the election result, and this is beneficial to the Dollar in the short term.
On the FED side, things will certainly remain frozen until the outcome of the American election. The FED has insisted on the need for a quick vote of a support plan, and they assure that the key rates will remain permanently low.
A low dollar is generally favorable for 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 market is up this week to 74.433 K instead of 71.176 K.






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