The cotton market opened higher Monday night but quickly eased into negative territory. The same old story of trade wars and government shutdowns are ruling the attitude of traders. Top Chinese negotiators are expected to arrive in Washington next week to continue the trade talks started in Beijing.
Although hopes are higher for a narrowing of difference, the reality seems to be both sides are very far apart in the key areas of technology and agriculture. The U.S. government shutdown enters its 32nd day, with each of those sides far apart as well.
Monday, China reported its economic growth rate for 2018 at 6.6%, which is the lowest level in 29 years. This is yet another sign of the economy is weakening under the tariff war. Still, the Chinese are an ancient people with ancient patience, so they are not ready to toss in any sort of negotiation towel yet. The IMF has warned of a global slowdown if trade differences are not resolved soon.
Cotton remains in a steep downtrend, and with such negative outside forces, we can only hope the market will be able to tread water until better days or better information comes along.
For Tuesday, support for March cotton lies at 73.15 cents and 72.65 cents, with resistance at 74.40 cents and 74.75 cents, Overnight volume thus far stands at 3,700 contracts traded.