The market was lower Monday on strong volume. Apparently, Speculators continue to experience a bearish response to the neutral U.S./China trade talks. Their long liquidation of Thursday and Friday pierced a well-defined, and we might add, very obvious trend line, which kindled Monday’s selling adventure. Thus the ICE Futures Monday fell nearly 1 cent early, before paring some of their losses in the close.
The market faces several potential hurdles this week, among them is President Trump’s State of the Union address Tuesday night, USDA’s weekly export sales data on Thursday, and then the January/February supply and demand report.
The export data will be from Dec. 27, while the supply-demand report will be a combination of January and February statistic. Expectations call for a reduction to the 2018 crop, resulting in a drop in domestic ending stocks.
It is thought if a trade deal with China can be soon reached, then “things” will return to normal. Our experience says such is not likely to happen. In this interim period, China has developed new trading relationships with Brazil and India, plus China basically continues to de-stock.
Moreover, the U.S. supply of high grade cotton maybe lacking, thus it may take a season or two, plus an adverse weather event somewhere in the Northern Hemisphere to potentially right cotton’s ship.
March cotton settled 72.76 cents, down 0.88 cent, July was 75.44 down 0.77 cent, and December was 74.00, down 0.12 cent. Monday’s estimated volume was a hefty 53,450 contracts traded.