Cotton futures have been largely consolidating since hitting a one-month high last week. December cotton traded 42 points lower on Tuesday to 65.26 cents a pound. Prices continued to push lower after Monday’s moderate gains. Prices have been testing the 66-cent support level. That level may contain price gains due to the strong acceleration below support a month ago. 

Cotton spreads have improved dramatically over the past month. It’s unknown if that has been due to commercial buyers stepping in at bargain prices. China has been reportedly making good will purchases of U.S. soybeans, though it’s unlikely the buying will extend to U.S. cotton. 

Research firm Cotlook lowered its global cotton surplus forecast this month due to lower production estimates in the U.S. and Brazil. Consumption was also raised from last month’s estimate. The International Cotton Advisory Committee still expects global cotton ending stocks to be 2.5 percent higher than the previous season.

The U.S. cotton harvest is nearing completion, though the USDA is still not releasing the Crop Progress report due to the government shutdown. Drier conditions have been favoring the cotton harvest in west Texas and the Southeast. 

The USDA said it will release the November WASDE report next Friday. The focus will be on production estimates, which could come in lower than the September report due to limited rainfall ahead of the harvest season.

Looking ahead to next season, government models have been pointing toward drier weather for much of the cotton belt. Eric Snodgrass with Nutrien Ag Solutions says there are going to be lingering risks for much of the South and Southeast all the way to next spring without any moisture. 

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