Overnight, the cotton market is in a quiet two-sided trade. Thursday, it saw a spike sharply higher amid rumors the Trump Administration is considering lifting some or all its tariffs if China would reciprocate with more concessions on her part.
Later on, that news was denied by U.S. trade officials, but if it is true, it suggests President Trump is willing to provide his negotiators different ammunition to be able to strike a deal with China by the March 1 deadline. Anyway, the hope of that resolution has many markets steady-to-higher this morning.
From its price reaction Thursday, the cotton market is painfully starving for information. Unfortunately, the government shutdown is now entering its 28th consecutive day, and it looks as if both political sides have dug in their heels.
Monday is Martin Luther King Jr. Day, so U.S. financial and futures markets will be closed. To that end, most investors are unwilling to initiate any bullish trades on a Friday and risk the weekend.
Still, cotton traders are filtering though as many different private sources as possible to garner much needed trading information, such as the size of the 2018 crop, and the potential crop loss in India. Summarily, for now social media is supplanting USDA as the main source for data.
Technically the cotton market remains in a steep downdraft, but it is working off its daily oversold condition by pushing towards the 75.00 level. However, the market is oversold on a much larger scale and hopefully, with the emergence of additional positive fundamentals, it should work higher to correct that situation as well.
New Crop December is slowly coming to the forefront for traders and producers. A couple of early surveys have the 2019 cotton plantings about as high as 2018 season. If that is the case, then with normal weather and diminished Chinese business, domestic stocks will hugely swell.
Naturally, the wild card in any season is Mother Nature. Recent seasons have experienced some massively detrimental events, so 2019 should not be any different.
Support for March cotton Friday will be 73.90 cents and 73.20 cents, with resistance at 74.90 cents and 75.60 cents.