DTN Cotton Open: Higher on Export Hopes

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The cotton market is starting this new week in middle March a tad higher. It is building on last Friday’s strong showing.That is, after the news Thursday suggesting the trade talks would missed their end-of-March deadline, sharply breaking prices, the market rethought its position and nicely recovered into week’s end. In fact, the old crop finished some 2 cents higher on the week.

Asian and European markets are mostly higher overnight, as there were no major geopolitical events over the weekend. Most investors are watching this week’s Federal Reserve two-day meeting. The gathering starts Tuesday and will end with a statement on the economy and interest rates on Wednesday about 2 p.m. eastern time. The Fed is not expected to alter its monetary policy at this meeting.

This morning is U.S. dollar is lower, which is a sideline cheerleader for cotton’s exports. We continue to hear India’s exportable amount of surplus cotton is dwindling. India has been a major beneficiary of the U.S.-China trade fuss. Thus, given her availability and proximity to China, she has been in the proverbial catbird’s seat. Yet one wonders why this has not been the case all along.

That is with India so geographically close, she has never been a consistent exporter to China over the years. We think it is because the U.S. has the most superior grade and the most reliable delivery system in the world. Thus, as India fades as an exporter, the Chinese may be forced to return to the U.S. for her cotton.

For Tuesday, close-in support for May cotton is 75.23 cents and 74.65 cents, with resistance forming at 75.98 cents and 76.14 cents. Overnight estimated volume is 2,535 contracts.

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