DTN Cotton Open: Trades Neutral, Awaits USDA Data

December cotton is slightly lower as traders prepare for Thursday’s all-important supply and demand report. USDA releases its latest crop findings at 11 a.m. Central. It is widely anticipated by industry analysts the government will greatly reduce the 2018 crop.

As subscribers know, some even first hand, Mother Nature dealt several severe blows to the 2018 crop in the forms of droughts, freezes, floods, and hurricanes. In addition, domestic ending stocks are expected to decline, as well as world carryout stocks.

Earlier Thursday, USDA released its weekly sales and exports numbers. They were much improved versus last week, but last week was a marketing-year-low data-wise. The report is essentially as follows: Net sales of 91,000 bales for 2018/2019 were up noticeably from the previous week and from the prior 4-week average.

Increases were reported for Vietnam (87,400 bales), Pakistan (17,200 bales), Japan (14,400 bales), Bangladesh (9,700 bales), and Turkey (8,300 bales). Reductions were reported for China (58,000 bales) and South Korea (4,400 bales). For 2019/2020, net sales of 15,500 bales were reported for China (7,900 bales), Pakistan (4,400 bales), Thailand (1,800 bales), and Japan (1,400 bales).

Weekly Exports were 151,000 bales, which was up 38% from the previous week and 2% above the prior 4-week average. Exports were primarily sent to Vietnam (38,900 bales), China (29,600 bales), Mexico (17,700 bales), Pakistan (14,500 bales), and Taiwan (10,000 bales).

After Thursday’s supply and demand report, the next big possible moment for cotton will be the meeting between President Trump and President XI at the G-20 gathering. By losing the House in the Midterms, the Chinese might perceive some political weakness in President Trump’s negotiating stance, but that remains to be seen.

However, improved economic data out of China somewhat dispels the notion the trade war is crimping its economy. China’s exports in October rose by 15.6%, year-on-year. That beats all expectations of an 11% increase. Imports in October were up 21.4%, year-on-year.

Imports from the U.S. dropped 1.8%. These numbers suggest China may be in no hurry to settle its trade fuss with the America. Still, independent analysts suggest China is notorious for fudging her economic numbers.

Today’s support for December cotton lies at 78.50 cents and 76.00 cents, while resistance will be found at 79.78 cents and 80.15 cents.

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