DTN Cotton Open: Higher on Improving Business

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The cotton market is higher overnight as weekly sales and export data confirmed China was in for a slug of old crop cotton. Last week, China was the top buyer, and repeated that act this week as well, but this time with more bales.

Despite the back-and-forth of government negotiators trying to hammer out a complete trade deal, life, as the old saying says, goes on. Hence, China’s textile industry needs a reliable flow of quality cotton. To that end, we like the fact China was top buyer of Pima cotton also. To us, that says high-grading fiber is needed as well.

The complete report follows:

Net sales of 125,000 bales for 2018/2019 were reported for China (84,700, including 6,600 bales switched from Hong Kong, 2,200 switched from Vietnam, and decreases of 8,800), Turkey (21,500), India (16,300), Pakistan (10,300), and Bangladesh (5,100 ).

Reductions were reported for China (11,600), Hong Kong (6,600), Malaysia (4,200), Indonesia (4,000). For 2019/2020, net sales of 32,800 bales were primarily reported for China (15,400), Pakistan (8,800), and Japan (7,300).

Exports of 350,100 bales were primarily to Pakistan (79,000), Vietnam (67,300), Indonesia (36,400), China (36,200), and Turkey (32,800). Net sales of Pima totaling 22,100 bales for 2018/2019 were primarily for China (13,700), Vietnam (4,400), and Thailand (1,200).

For 2019/2020, total net sales of 1,000 bales were primarily reported for China (500). Exports of 16,600 bales were primarily to India (5,900), China (4,500), Pakistan (2,400), Thailand (1,600), and Indonesia (1,000).

The U.S. dollar broke Wednesday on the Fed’s statement about limited interest rate hikes for the next two and one-half years. Overnight, it has regained much of that loss. The strength of the dollar continues to be fed by the weakness of all the other currencies of the world.

That is, when one looks at the world, with all of its geo-political and economic struggles, the dollar, and to a small degree gold, seems to be the top two safe havens for international investors. However, there is more emphasis in owning the dollar.

For today, support for May cotton is 75.10 cents and 74.40 cents, with resistance at 76.35 cents and 77.05 cents. The overnight estimated volume is 4,220 contracts.

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