December cotton settled 0.30 cent lower Tuesday, influenced by trader disinterest and low volume. In fact, Tuesday’s estimated volume of 16,500 was one of the smallest trading sessions in weeks.
The market was held in check by end-of-the-month squaring, and an erratic two-sided Dow Jones. Still, the market remains in a steep technical down-trend of its own. However, typically, prices tend to bottom out during the October-November-December period when harvest reaches its zenith.
Afterwards, as the crop gets processed, that is consumed, exported, or stored, prices tend to ascend into the following calendar year. However, this year the number one outlier was the trade war with China. That trade war can prove to be a two-edged sword. That is, the tariff implementation is the one fundamental that sent cotton reeling lower from its 94.00 cent spring high. However, if some sort of trade deal is worked out at the G-20 meeting between the U.S. and China, that same tariff sword will cut bullish.
The market is anticipating several key events that unfold in November. Initially, is next week’s midterm elections, followed by USDA’s supply-demand on September 8, and finally, as we have previously mentioned, the G-20 summit on November 30.
Another major event will be this Friday’s jobs data from the Labor Department. A strong jobs number would mean a strong economy, and thus potential improved domestic demand for textile products.
December cotton settled 76.90 cents, down 0.27 cent, March was 78.36 cents, off 0.30 cent and red December was 76.77 cents, up 2 cent.