The cotton market is bouncing slightly higher Friday morning after its crushing break yesterday. Thus far this week, Monday was a downer, Turnaround Tuesday was fantastic, Wednesday had the market easing higher, but then to reiterate, Thursday was a punishing session.
Still, thus far for the week, spot May is 120 or so points higher than last Friday’s close. Of course, we have the rest of this day to decide cotton’s weekly outcome.
On April 1 China will cut domestic taxes on certain citizens in an effort to stimulate the economy. Of course, as it stands, China is the world’s second largest economy, but it is also the world’s largest raw commodities importer.
This event comes as measured response to the U.S.-China trade by China’s central bank. It recently eased its monetary policy following a few months of poor economic data. Although a trade deal remains hopeful, the fact that trade talks may carry over into the month of April has cast a negative pall over the market.
Thursday’s weekly sales and exports data failed to impress the trade. Net sales for the week ending March 7 came in at 166,100 bales for the current season, and 23,100 bales for the new crop season, for a total of 189,200 bales.
Cumulative sales stand at nearly 88% of USDA’s forecast of the 2018/2019 versus the five-year average of 88.8% for this time of year. The market remains hopeful that additional strong export business will emerge.
For today, support for May cotton is 74.00 cents and 73.10 cents, while resistance stands at 75.98 cents and 76.14 cents. Overnight estimated volume is 2,945 contracts.