A Wall Street Journal report suggesting U.S. and Chinese negotiators faced a widening gap in their talks knocked the cotton market off its rocker Tuesday. In fact, cotton posted new sessions lows right into the waning seconds of the day’s trade. Earlier in the session there was a bit of anticipatory euphoria which had cotton up 100 points, but at midmorning Tuesday, when the aforementioned Wall Street Journal article hit the newswires, many market went reeling.
The Dow, which initially was up over 300 points, fell to only 90 points higher, and as we have indicated, cotton dropped a hundred points. It suddenly reminded us that it was Turnaround Tuesday, a trading phenomenon that suggests the cotton market, on any given Tuesday, often trades opposite to its behavior of Monday. Given, Monday was a strong up day, it is not particularly surprising to see the market spill Tuesday.
Technically, the trend of the market remains steeply down. Thus, to dramatically change its bearish course, it will take new dramatically bullish news. To that end, in absence of USDA reports due to the government shutdown, such bullish inspiration would have to originate with the U.S./China Trade Talks, and it seems those discussions are not that close.
President Trump is scheduled to address the nation on the border security Tuesday night. However, traders will be listening to hear if he makes any comments regarding the trade war with China.
Tuesday’s estimated volume was 37,200 contracts traded.
March cotton settled at 71.67 cents, down 1.08 cents, July was at 74.40 cents, down 1.00 cent and December cotton finished at 73.23 cents, off 0.86 cent.