This week’s cotton trade entailed new life of contract lows after a sharp drop below support on Monday and another sharp selloff on Wednesday. December cotton traded about $1 lower on Wednesday amid strong technical pressure as prices struggled to trade above a newly-established resistance level. 

Yesterday’s stop-running likely washed out many weak long positions of traders attempting to pick a bottom. Additionally, uncertainty regarding the partial government shutdown could have added to selling pressure. Prices reinforced their downtrend this week after posting lower lows on the charts.

December prices came within 0.46 cents of the “Liberation Day” low on Wednesday before they reversed higher. Upward price action could be limited by the 66-cent level, which served as old support and is now a resistance level. 

Speculators hold a historically large net short position as prices push to fresh lows. Strong commercial buying and bearish fundamentals have given traders little reason to reverse course on their short positions. 

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PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. FUTURES TRADING INVOLVES SUBSTANTIAL RISK AND IS NOT SUITABLE FOR ALL INVESTORS.