The cotton market started the new year decisively lower on a failing Dow Jones. Early Wednesday morning China announced negative manufacturing numbers that showed contraction is occurring in the Chinese economy for the first time in 19 months. No doubt that number was a result of the U.S./China tariff war. However, eventually the sharply lower Dow was able to correct positive, but the cotton market did not follow suit. In fact, the cotton market posted new daily lows right into its close. No question both the fundamental and technical paths of least resistance for the market are down.
Fundamentally, the trade war and a disinterest by cash merchants are pressuring prices lower, while the chart trend is in steep decline. A third negative is that the market is operating without any flow of market information — as for all practical purposes USDA is closed. Thus no sales and exports data, and possibly no supply-demand information next week either.
Wednesday’s estimated volume was 33,500 contracts traded. March cotton settled at 70.84 cents, down 1.36 cents, July 73.58 cents, down 1.05 cents and December was 72.33 cents, down 0.97 cent.
Keith Brown can be reached at email@example.com or by calling (229) 890-7780.