December cotton is demonstratively lower as fallout from last week’s supply-demand report and a strong U.S. dollar are weighing heavy on prices Monday morning. Although last Thursday’s crop report did offer a huge cut to the 2018 crop, it also showed a 500,000-bale decline for exports.
This reduction suggests, going forward, U.S. exports will continue to suffer. Interestingly, both the supply cut and the demand reduction proved to be something of an offset for traders.
The U.S. dollar continues to ramp higher. The Federal Reserve met last week and elected to maintain its planned series of rate hikes into 2019, including one for next month. Thus, the U.S. dollar continues to strengthen against all other currencies, which is export-negative for US businesses.
Monday is Veterans Day and all federal offices, including the banking system, are closed. USDA will delay its normal crop harvest/crop condition numbers until Tuesday. Weekly sales and exports will be pushed back until Friday.
Support for December cotton lies at 76.65 cents and 76.10 cents, with resistance at 80.50 cents and 81.00 cents.