Back in the old days when real men traded cotton, the October was a true and hardy contract, one that had many wild rides, reversals, all-time highs, and ferocious battles over cert stocks. But now that the contract has been made over by ICE to attract button pushers, long-only riffraff, and various hedge funds, the Oct has gone by the wayside. Open interest in the contract reflects cert stocks, which are both almost nothing. It appears cotton is headed to a 4 contract per year status, as the Oct has gone the way of the floor and everything that was right and good with this market.
Big rains covered just about every piece of ground between San Antonio and Huntsville, with amounts ranging from 1” to 4” in good coverage. None of the crop needed these rains, but they will help Texas to recover and replenish from subsoil moisture levels that are still extremely low. Weather is perfect for harvest now, which should begin by midweek.
Since the major price factor out in front is the chance of China selling some reserves, how that plays out will be the market maker over the next few weeks. Weather, macros, the Fed, etc., will have some impact, but the Chinese reserves will push price around. No sales and cotton goes up. If they unload sufficient reserves to satisfy mills for a few months, the market goes down. We are negative but admit to having no idea what China will do.
There is a cycle that bears watching on long term charts, that being a 27 to 28 month period between lows. Chart shows the low periods and the ideal due months, and while the cycles sometimes wander a couple months before or after, they have been reliable enough to be on the lookout. The next cycle is due in Oct, maybe Nov. If this one is on time, it could occur between last month all the way into Dec.