Cotton Head Lower After Stocks Revised Higher

Cotton -marianne-krohn-RNqZbnBnMQk-unsplash

Cotton closed out Wednesday following some pressure from USDA data, as contracts were down 46 to 99 points.  The US Dollar Index was down 494 points on the day. CPI data came in at an annualized rate of 3.3% for May, below the 3.4% estimate and 3.4% from April. Core CPI was 3.4%, vs. the 3.5% estimate. The FOMC announced no rate changes for this month, signaling 1 possible rate cut in 2024 via their dot plot.

The monthly WASDE update showed a 500,000 bale cut to the US export figure at 11.8 million bales. That helped to raise the old crop stocks by 450,000 bales to 2.85 million. As for the new crop numbers, USDA left the output alone, as expected but raised the ending stocks number by 400,000 bales to 4.1 million, thanks to the increased carryover.

The world data showed a 490,000 bale increase to the 23/24 carryout, at 80.97 million bales. New crop was taken 489,000 bales higher to 83.49 million bales, on the increased carry. 

Warehouse cotton stocks continue to build ahead of July futures deliveries, as ICE certified cotton stocks were up 1,814 bales on June 10 at 134,938 bales. There were 3 decerts, with 4,988 bales awaiting review. The Cotlook A Index was back down 170 points on June 11 at 81.95 cents/lb. The USDA Average World Price (AWP) is 58.13 through Thursday.  

Jul 24 Cotton  closed at 71.74, down 99 points,

Dec 24 Cotton  closed at 71.65, down 78 points,

Mar 25 Cotton  closed at 73.16, down 72 points

On the date of publication, Alan Brugler did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.