The market is lower Thursday as no resolution to the government shutdown seems likely any time soon. Yesterday the President met with Congressional leaders to work our their differences, but the Democrats refused to budge on border security funding.
The immediate result was a steep sell-off in the Dow Jones. At its peak yesterday, the Dow was up 300, but after that meeting failed, it crumbled and this morning is an easy hundred lower. Such volatility causes traders to shy away from other markets, such as cotton.
Thus far this week, the cotton market has really seesawed about. One day it is 100 higher, the next it’s 100 lower. It may be paradise for day-traders, but overall, the trend is going nowhere.
Naturally, what the cotton market needs is “cotton news”. Yet, with the current government shutdown there is none to be had. To that end, today’s sales and exports and tomorrow’s monthly supply-demand reports are delayed.
Still, the market has dialed in a tremendous amount of negative news. Thus, from the perspective the glass is half-full view, there are more positive events to potentially occur for cotton in the future than negative ones. To that end, reopening the U.S. Government would certainly be a big plus, but a trade deal with China would be “huge moon shot”.
Also, the Federal Reserve’s willingness to slow rising interest rates is friendly in that such action can weaken the U.S. dollar lower, thereby helping facilitate exports.
For today, support for March cotton is 72.70 cents and 72.00 cents, with resistance at 74.20 cents and 75.50 cents.