Small chinks in the bears’ armor remain just that – small. However, they do exist, and absent a great, absolutely unexpected, widespread rain over about two million acres of Texas cotton (mostly districts 1-N and 1-S) over the next two weeks, those cracks will begin to widen. Of course, much more moisture is needed over the large area of ​​dry soil of 1-S.

Expect the current price increase to continue as July catches up to the first announcement day on June 24. The price increase is based on supply and will move along with the moisture deficit. So, keep looking for higher prices in the new December crop contract.

However, the market would like to see some signs of improved demand, but it will not. If weather conditions follow last year’s pattern, December futures could see a maximum increase of 10 cents in the October-November harvest season. A 10-cent rally would push December back into the 82-cent zone with a chance of 84 cents. World carry would support prices in the low 80s.

Historically, the US carryover, estimated at 4.1 million barrels, would support higher prices. However, the loss of US market share in the world trade arena negates any incremental significance of a carryover of up to 4.1 million bales. Again, such a rally would be entirely weather-based, given current economic forecasts. Thus, not only US weather, but crop progress in other major world production regions are of great importance to New York ICE price activity. Increased attention is also given to hurricane activity in the Gulf and South Atlantic states.

The weekly export report again detailed the aggressiveness of millers buying for future delivery as weekly net sales of mills came in at 189,000 bales. China was the main buyer, taking 84,500 cylinders. Vietnam bought 37,100 balloons and Pakistan bought 33,800 balloons. While 18 countries bought the US mountain, none of the other 15 countries bought more than 4,900 balloons each. Thus, while buying was widespread, the mill yarn business remained very weak.

Another confirmation of the weak mill business was noted in the shipments report. Export shipments totaled just 197,900 mountain bales, coming in below the average weekly volume required to meet the USDA’s recently reduced shipment estimate of 11.8 million bales for the 2023-2024 marketing season for the ninth consecutive week. Top shipping destinations during the week were China, Vietnam, Turkey, Pakistan and Indonesia.

The expiration of the old July harvest contract begins on Monday, June 24. Certified stocks total 136,656 barrels and recent trading activity suggests traders are reluctant to take ownership. Also, another 5,334 cylinders were awaiting certification review. Given the recent price collapse, it is expected that up to three-quarters of the stock, or more, will be delivered against the contract. Again, this is further proof that the current mill business is weak.

The current weakness in demand has already factored into December new crop contract prices. The weather, don’t ask, will control prices over the coming months. Thus, again it becomes the market adage that “what happens tomorrow is much more important than what happens today”.

Look for December to slowly – very slowly – continue its journey to higher prices.

Give the gift of cotton today.