Cotton prices on ICE (COTTON) are today almost 1% higher, rebounding since last sell-off. Overall, global demand is not very strong, however the last hurricanes in the US may provide some support for prices, due to potential production cuts in US, as hurricanes Helene and Milton impacted US on a start of crop season. 

  • As for now, US crop progress as of 6 October came in 26%, and now we can speculate that is about 30%. If today USDA WASDE (scheduled at noon, ET time) shows much more than expected production cuts (especially in the US), we can expect that cotton will test resistance near $74-$75 with potential breakout above those significant levels.
  • On the other had, if production estimates will not change very much or will be in line with Bloomberg expectations, we can see retest of $70 levels. The market will also watch Chinese stimulus measures, with Chinese special briefing scheduled on Saturday' the higher stimulus will be, the bigger will be also impact on cotton prices. This should be at least 3 trillion yuans, to address cotton market and support prices positively, while 2 trillion may be even perceived disappointing.
 

Bloomberg analysts (10) estimates ahead of USDA WASDE report scheduled at noon ET time today (in million bales). Source: Bloomberg Finance L.P., USDA WASDE

COTTON (H1 interval)

Cotton gains today despite strengthening US dollar, as traders bet on risk of higher than expected US production cuts, impacted by hurricanes Helene and Milton (Florida, Georgia, Louisiana and Mississippi Delta); potential Chinese stimulus announcement on Saturday.

 

Source: xStatiom5