Dec 19’ cotton futures have started the day down again at 62.36 currently with short-term supply and demand fundamentals still looking bearish. U.S. cotton crops have been noted as currently improving with cotton crops rated good/excellent increasing and up 7% over the 10-year average. There have been some concerns regarding production in India due to the late monsoon season, but that has yet to offer any significant impact on prices. There is still some potential for the U.S. and China reaching a positive trade agreement which would leave the currently priced-in demand tone as heavily undervalued, but I wouldn’t suggest holding one’s breath. However, the managed money funds currently hold a large record net short position leaving cotton in oversold territory. We may be approaching a point where the selling momentum could be drying up and any truly positive U.S./China trade talks or legitimate supply threats could spark a wave of short covering. This makes cotton a market to keep your eye on as there could be a great opportunity for well-timed bulls.
Cotton Dec ’19 Daily Chart