The cotton market was strongly higher Wednesday as the market began to work-off its oversold condition. When any market is labeled “oversold,” it means prices for that market have fallen too fast, too steep, without a correction. A quick glance at a cotton chart makes that technical point.
Additionally, the market strengthened on comments from President Trump indicating he would definitely meet with President Xi of China at the G-20 meeting on June 28. There had been some speculation as to whether the Chinese leader would even be in attendance at the summit. To that end, President Trump had said if Xi was a no-show, he (Trump) would immediately slap China with additional hefty tariffs. Apparently, the two will meet, and hopefully jump-start the stalled U.S.-China trade negotiations.
Thursday, USDA will issue its weekly sales and exports report. For a period of time, old crop sales have been fairly stout, but of late they have been lagging. New crop sales are already under what is a normal pace for this time of year. Last tally showed new crop sales running behind the five-year average by some 25%. Last week, saw cancellations by China and Mexico, which we took to be more politically motivated than a business adjustment.
This Friday, spot July cotton will see the expiration of its options. Soon afterwards, the July futures will enter its delivery period on Monday, June 24. All on-call cash cotton must be offset before that date. Such deadlines will only add to the market’s volatility.
July cotton settled at 66.57 cents, up 0.92 cent, December closed 65.88 cent up 0.84 cent and March went out at 66.58 cents, up 0.67 cent. Estimated volume was 58,600 contracts.