The cotton market is trading slightly lower Friday morning as traders slough off any possible damage to the Delta crop from Hurricane Barry. The storm is expected to move inland Saturday/Sunday, bringing copious amounts of rain and strong winds to the Louisiana crop. Given the general developmental stage of the Delta crop, some analysts believe it would be able to handle such adversity, but such a depth of bad weather is never good at any time.
In other news, overnight China reported her exports for June were down 1.3%, year on year, but expectations were for a 2.0% decline. Additionally, China’s June imports fell some 7%, which was not as negative as her 8.5% decline for May. Analysts were looking for a 3.8% decline.
A Wall Street Journal poll among economists suggests there is a 30% chance the U.S. recession will happen within the next year. While that implies there is 70% chance one will not occur, it does point to the need for a resolution to the China trade war to avert a recession altogether.
USDA’s supply-demand report of Thursday was deemed neutral to slightly negative. However, most of the adjustments to the domestic and global crops essentially were accounting adjustments to the beginning stocks category as oppose to the specific categories of production, consumption, and exports. One surprise in the report was the increase to India’s crop at a time when most analysts describe her with a water crisis, and slow monsoonal activity.
For Friday, support for December cotton is not established given it has posted new contract lows this morning. Resistance does stand at $63.70 and $64.50. Overnight estimated volume is 4,600 contracts.