DTN Cotton Open: Lower on Uninspired Sales

Photo: Blair Fannin, Texas AgriLife Extension

The cotton market is trading lower on quiet volume as Friday’s delayed weekly sales and exports showed no strong activity. A summary of the report from USDA is as follows:

Net sales of 141,500 bales for 2018/2019 were up 96 percent from the previous week and up noticeably from the prior 4-week average. Increases were reported for Vietnam (49,900), India (45,600), China (14,900), Indonesia (13,200), and South Korea (9,900). Reductions were reported for Japan (4,900), Bangladesh (4,500), Mexico (4,000), and Pakistan (2,300).

For 2019/2020, net sales were 55,300 bales, primarily for Bangladesh (18,800), Turkey (9,400), Mexico (7,700), and Indonesia (6,900), were partially offset by reductions for China (1,300) and Thailand (900). Weekly shipments of 340,400 RB were up 6 percent from the previous week and 4 percent from the prior 4-week average.

Exports were primarily for India (83,100), Vietnam (64,700), Turkey (55,400), Indonesia (21,400), and Mexico (16,600). Net sales of Pima totaling 2,500 bales were reported for India (1,400), Bangladesh (400), Pakistan (300), China (200), and Japan (200).

Today’s unemployment number from the Labor Department was 224,000 non-farm jobs. This number was well above industry expectations, and somewhat challenges the notion for a Fed rate cut at its July meeting. In reflecting upon that data, gold is down $20, the U.S. dollar is 25 points higher, and the Dow Jones is lower by 100 points.

So far this week, China sold 11,800 tonnes from state reserves on Tuesday, and another 11,900 tonnes on Wednesday. 12,800 tonnes were also sold today. The steady supply of auction-induced sales are seen as short-term negative, but long-term friendly by the market. Yet, the cotton market is about the here and now, thus Chinese auction activities are a definite drag on the market.

For next week, USDA will report on the crop’s condition on Monday, while Tuesday will see the final expiration of the July Contract. Thursday will host both weekly sales and exports, as well as the monthly supply-demand report for calendar July.

For today, support for December cotton is 66.70 cents and 65.70 cents, with resistance at 68.35 cents and 69.40 cents. Overnight estimated volume is 2,690 contracts.

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