After a punishing week of crashing prices, the cotton market still cannot muster enough power to rally as it enters Friday. The last few days saw outside help from the likes of the Dow Jones and the Chicago grains to buoy cotton’s prices, but left to its own devises, it cannot recover.
The overhang of the Chinese trade war weighs too much. Thus, its charts are damaged, and its psychology is froth with negativity. So somehow, someway, cotton may have to face the prospect of a life without China, until certain issues are settled.
As it stands, there are no new set dates for renewing the U.S.-China trade talks. Supposedly, there will be a meeting between President Trump and President Xi next month at the G-20 meeting in Japan. All eyes will definitely be on that gathering. Just one word, or one bullish tweet, from that talk can send not only the cotton market zooming higher, but most other financial and commodity markets as well.
In the global currency markets, the Chinese yuan continues to depreciate against the U.S. dollar, due to the U.S.-China trade war. Europe is somewhat unsettled, as the British pound has sold off on news that British Prime Minister Theresa May will yet resign.
Brexit remains not only a huge uncertainty, but a near mystery as well. The Australian dollar is losing ground to the U.S. dollar. Australia is a major trading partner of China. The Aussie dollar has hit 10-year lows.
For today, support for December cotton is 66.40 cents and 65.25 cents, with resistance at 67.50 cents and 68.70 cents. Overnight estimated volume is 4,885 contracts.