The cotton market has been moving in and out of positive and negative territory all night as it awaits USDA’s combined January and February supply-demand data. Subscribers will remember due to the government shutdown, the January report was delayed, and therefore will be meshed into Friday’s report. Expectations call for a reduced 2018 crop, which in turn should lower domestic carryout.
Today will also be the option expiration for the March contract. That means all calls and puts will die, unless a particular strike price is eligible for exercise into the futures. For March contract basis, the 74.00-cent and 73.00-cent points look to be key price levels.
India’s crop may be worse than analysts initially expected. Indian officials have indicated the sub-continent crop production may hit a nine-year low, currently pegged at 33 million bales.
Of late, and for obvious reasons, India has been a major beneficiary of the U.S.-China trade war. However, fortunes can change if India’s crop is indeed less, and if the U.S. and China strike a deal before the March 1 deadline.
For today, close-in support for March cotton is 72.40 cents and 72.20 cents, with resistance at 73.40 cents and 74.15 cents. Overnight volume is estimated at 8,125 contracts.