DTN Cotton Open: Executes About-Face as Tariff Fears Subside

The cotton market is higher this morning as overnight fears of new tariffs were digested. December cotton is currently some 90 points higher on slack volume. However, it has gained back nearly half of Wednesday’s losses. While the possibility of new tariffs on Chinese imports are real, this latest proposal is required to undergo public comment which would delay any implementation beyond the month of August.

The market will now turn its attention to today’s supply-demand report, scheduled for release at noon (eastern) for further price guidance. Expectations are for a fractional increase in U.S. stocks, but a small reduction is world carryout. Last month domestic stocks were pegged at 4.7 million bales, and the world at 83.05 million.

There was an obvious draw-down in certificated stocks this week. Certificated stocks are those bales of cotton available for delivery against the futures. One day stocks stood at 92,000 plus days, and the next day were 32,000 bales. Apparently someone needed that cotton immediately. Obviously, the market sees such action as friendly.

Also this morning, USDA will issue its weekly sales and exports data. To reiterate, the hope is no major cancellations from China, in either crop seasons, will be seen.

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