After a tumultuous, bullish Monday, the cotton market is edging lower in turnaround Tuesday trade. Thus far, the high came on the opening for the December contract, which is a typical bearish technical sign for the daily session. However, the fundamentals appears to be gaining some bullish strength.
Thoughts are USDA had better reduce the 2018 crop on its November supply-demand report, or taxpayers will want their money back. The October USDA report actually raised the crop some 80,000 bales, right in the midst of Hurricane Michael’s wipeout of the Georgia crop. Additionally, the trading public feels like the crop situation with Florence was under reported as well.
To that end, Monday’s crop harvest/crop conditions data, paints a worsening picture. Georgia slightly improved from 54% very poor/poor to 49% currently, but that number represents a massive loss. Meanwhile, Texas showed increasing damage from last week’s bout with rains and freezing temperatures. The Texas crop stands at 41% very poor to poor.
We still contend the market is waiting on the results of the midterm elections. Our thinking is a Republican win might entice China to settle the trade dispute with the U.S. Meanwhile, the U.S. dollar continues to rise, while the Dow Jones continues to precipitously decline.
For Tuesday, support for December cotton is seen at 78.75 cents, with resistance at 80.85 cents and 82.80 cents.