The cotton market had an uneventful overnight trade with low volume and a narrow range. The market should be anticipating USDA’s latest supply-demand data, but that report is a no-go. It’s apparent the government shutdown will likely extend into its fourth week. Such a lack of timely and necessary information is taking a collective toll on all facets of the cotton industry.
However, there are fresh trade talks with the Chinese scheduled for January 22 in Washington. The negotiations are operating under a March 1 deadline. If no deal is reached at that time, the U.S. will place a 25% tariff on all imported Chinese goods.
The U.S. economic data to watch today is the consumer price index for December. The CPI measures inflation and the expectations are calling for 0.1% increase from November and up 1.9% year-on-year. Recent inflation data from around the globe points to a tamer outlook on rising prices in the coming months. In fact, China recently reported declining inflation, a sign of the economy slowing down.
As cotton ends its first full week of trading, it stands a mere 36 points higher than last week. In other words from Friday to Friday, the market has gained only 36 points. Unless the deadlock on the government shutdown is broken or positive trade news emerges with China, expect the same next week.
For today support for March cotton is 70.70 cents and 72.70 cents, with resistance at 74.20 cents and 75.40 cents.