Thursday saw the cotton market trade above the 60-cent mark, but failed to settle over it. However, Friday morning, the market is right back, attacking that all-important psychological mark. Its newfound strength may lie in the fact the market is supremely oversold, and it is a Friday. Often that can be the recipe for a recovery of sorts.
However, there are other positives to consider. Yesterday’s sales and exports showed total sales of 480,000 bales when both crop seasons are combined. So far, sales have reach 48% of USDA’s 2019/20 forecast, compared to its five-year average of 41%. The amount of sales needed to reach the government’s projection stands at 161,000 bales per week.
Another price positive is that the five-day forecast for West Texas is abnormally hot and dry. Moreover, the two week forecast calls for extremely hot temperatures, with few chances for scant rain. Such weather adversity will impair any non-irrigated fields.
The U.S./China trade war remains not only unsettled, but also in a state of confusion. President Trump has indicated the Chinese are hurting and want a deal, but that a trade agreement is “up to him”. Naturally, the Chinese have a different view. Supposedly, trade talks are scheduled for September, but with such rancor, they could be cancelled.
For today, support for December cotton stands at 59.12 cents and 57.58 cents, with resistance at 60.20 cents and 60.90 cents. Overnight estimated volume is 2,751 contracts.