The cotton market is uneasily higher Wednesday morning after suffering a wild two-sided trade after USDA’s crop report. In that data, domestic numbers were left unchanged from the May monthly report, while a couple of world categories were lowered. Bottom line, global stocks increased some 1.65 million bales to stand at 77.25 million bales.
Chart-wise, the trend of the market remains down. The simplest way to make that determination is to hold a chart out at arm’s length, and see how prices have sharply declined from the upper right corner to the lower left corner of the page. To that end, speculators remain firmly bearish and short-sold.
Fundamentally, while there are troubled spots in some cotton producing areas, recent rains across the Southeast have definitely rejuvenated the southeastern crop, while some parts of Texas are questionable. Of course, the main overarching negative for the market is the on-going trade fuss with China. Hopefully, President Trump and Xi can get negotiations going again when they meet at the G-20 late this month.
China’s May Consumer Price Index hit a 15-month high. Year-over-year, it was up 2.7%. Food prices led the charge, with pork prices up some 18%. China recently announced a major economic stimulus package in hopes of offsetting damage done by U.S. tariffs. China continues to offer cotton for sale from state reserves as a means of lowering import dependency.
For today, support for December cotton is the obvious 64.70 cents, with resistance at 66.15 cents and 67.10 cents. Overnight estimated volume is 5,714 contracts.