The cotton market is trying to hold on to Thursday’s gains, although there was some controversy involved. Apparently, in Thursday’s exports sales report, USDA mistakenly listed China as the top buyer of some 85,000 bales, when it was Vietnam.
Interestingly, USDA corrected itself by 11:20 a.m., and the rally started right after that. So, it seems to matter not that China was not the buyer, but rather that a slug of cotton was still sold.
Cotton’s charts seem to be changing appearances for the better. The market hurdled its January highs, stampeding some of the short-sold speculators into buyers. Most of the closely watched technical indicators have now all “gone bullish.”
In fact, one trader suggested the rally unfolded when cotton’s long-term downward channel was broken. We think that was a different way of saying the January highs were violated. At any rate, the attitude of the market has improved.
Next week, USDA will issued its 2019 planting estimates. Remember, this is acreage producers intend to plant, not necessarily will plant. Weather, competing crops, input costs, and the trade war will all have a collective say if the final acreage number released in June.
For today, close in support for May cotton is 76.14 cents and 75.72 cents, with trouble at 78.45 cents and 79.80 cents. Overnight estimated volume is 4,515 contracts.