The cotton market opened higher but closed mixed Monday. Specifically, the old crop was lower, while new crop finished fractionally higher. Such action may be a continuation of the market’s trend, which is encouraging traders to sell the front end of the market (May or July), offsetting it with the buying of the back-end (December). Anyway, Monday’s session was done on less than dynamic volume, so we would not read too much into the session. Estimated volume was right at 25,000 contracts traded.
Technically, the market seems to be attempting a turn. Most of the closely-watched chart indicators appear to be “hooking north,” but the market remains under the January high, which is a crucial technical resistance point. The market was also disappointment with the alleged news the U.S./China trade talks will likely drag across the entirety of spring, March, April, May, before the possibly of a Trump/Xi meeting in mid-June likely occurs.
The market will be keenly watching this week’s export-sales report this Thursday. Despite the litany of bearish events that have befell of the market, U.S. cumulative sales are running right at their five-year averages of 88%. Also, last week saw China lead the charge as top old crop buyer. To that end, if she suddenly becomes a regular participant in buying old crop cotton, without a trade deal, such would seem pretty telling to us about its cotton needs.
Monday, May cotton closed 75.27 cents, down 0.23 cent, July was at 76.41 cents, off 0.19 cent and December settled at 74.70 cents, up 0.18 cent. That was December’s highest close since January 18.