December Cotton bucked the normal influence of Turnaround Tuesday to post its highest close in two week. However, volume was moderate at an estimated 15,000 contracts.
Early on in the day it appeared as if the market would succumb to the influence of Turnaround Tuesday and close lower, defying Monday’s stronger trade. However, by midday, it was obvious the market had no interest in trading off. Short-covering ahead of Thursday’s data on sales and exports, as well as supply/demand numbers encouraged the buying.
Also, as we’ve previously mentioned, the market remains in a steep oversold condition. Readers might remember our monday comments where we referenced the technical retracement levels of 50% and 62% basis the December contract. It now feels as if those areas are within reach.
Another interesting aspect is the fact the market is able to rally even in the face of Chinese trade retaliation. This week she announced the implementation of a 25% tariff on U.S. Cotton, on top of the existing 1% tax. Thus, U.S. Cotton will face a new import tax of 26%.
December Cotton settled at 86.38 cents, up 91 cents, while March 2019 closed at 86.02 cents, up 66 cents. December 2019 Cotton ended at 79.80 cents down 18 cents. Total estimated volume for the session was 18,565 contracts.