The cotton market opened essentially unchanged Sunday night, trading both sides of Friday’s close on slow volume. However, as the daylight breaks, prices are weaker. Weekend rains in west Texas and a warming outlook may allow certain portions of that crop to improve. Of course, more of the overall crop’s situation will be known in Monday afternoon’s weekly condition report from USDA.
As of June 27, cumulative cotton sales for the 2019/2020 crop year stand at 25.5% of USDA’s forecast. The five-year average is 22.5%. Optimism is running high this week for a trade with China, as the two sides gather for new discussions. A U.S. delegation is leaving for Beijing today, and reportedly will stay the week.
In other news, the Turkish lira is under pressure this morning, and has dropped around 2% to the U.S. dollar. Turkey’s president fired the head of the Turkish central bank. Last Friday’s strong U.S. jobs report somewhat dented trader’s enthusiasm or a Federal Reserve cut to U.S. interest rates. Non-farm jobs were 212,000, much higher than expectations. That number caused the Dow Jones to fall. The Federal Reserve will meet mid-July.
Tuesday, spot July cotton expires. To that end, there were seven notices issued for today by Term Commodities. Wells Fargo stopped 55, and SG Americas took the other two.
Later this week, USDA will issue its latest supply-demand data. With fewer acres, it will be interesting to see if the government will adjust crop yield and size.
For Monday, support for December cotton is 66.12 cents and 65.70 cents, with resistance at 67.50 cents and 67.90 cents. Overnight estimated volume is 2,170 contracts.