DTN Cotton Open: Higher on Trade Anticipations

©Debra L Ferguson Stock Photography

The cotton market received new bullish life Tuesday in the form of a presidential tweet. In that tweet, President Trump announced there would be extensive meetings between himself and President Xi at the G-20 meeting in Japan next week concerning U.S.-China trade relations.

The cotton market received new bullish life Tuesday in the form of a presidential tweet. In that tweet, President Trump announced there would be extensive meetings between himself and President Xi at the G-20 meeting in Japan next week concerning U.S.-China trade relations. Most markets took that news bullishly well. Of course, friendly results must soon follow.

The Federal Reserve will announced their latest interest rate policy Wednesday at 2 p.m. EST. While the Administration is bullying for a rate cut, the Fed has actually contemplated a rate increase. However, neither move is expected today.

Thursday, the market will see weekly sales and exports. Last week saw poor numbers, so the market is in dire need of friendly data, provided spot July is able gain back some of its lost ground. As subscribers know, July cotton will enter its cash delivery this coming Monday, June 28, thus all on-call contracts must be flattened by the Friday, June 24 close.

Managed money speculators remain heavily short the market. In fact, the most recent commitment-of-traders report indicates they are net-short some thirty-thousand-plus contracts. If the right set of fundamentals comes along, such as a Chinese trade deal, crop troubles in the U.S. or in India/China, or a combination of both, the market may be sitting of something of a friendly powder keg.

China sold some 9,000 tonnes of cotton from state reserves yesterday. The inference is auction actions will lessen the need for foreign imports. Yet, the auction totals seem to be less in numbers, and common sense says the more cotton sold now, the more cotton will be needed later.

For today, support for December cotton is 66.10 cents, with resistance at 69.70 cents and 70.10 cents. The overnight estimated volume is 5,982 contracts.

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