One huge reason for the market’s timidity is the lack of progress on the U.S.-China trade talks. As of now, there are talks scheduled for September, but the fact the U.S. is now attempting to link any trade treaty success to how China handles Hong Kong is upsetting the Chinese. An immediate solution is not at hand.
Monday afternoon, USDA reported on the condition of the crop. Overall, the 2019 Crop stands at 49% good/excellent down from last week’s reading of 56% good/excellent. The five-year average is 42% good/excellent. Texas saw a reversal of its recent good fortune as ratings were down ten percentage points to 42% good/excellent. The forecast for Texas this week calls for more of the same: high heat and no rain.
The Commitment of Traders report, dated August 13, shows speculators remain net short to the tune of 44,500 contracts. This total fell from their peak position as they have bought back about 2,700 contracts. Some traders believe the speculators are vulnerable to unwinding their positions, but without a major fundamental or technical reason, having them so saturated to the bearish side is not automatic buy signal.
For Tuesday, support for December Cotton stands at 59.00 cents and 57.90 cents, with overhead resistance at 60.25 cents and 60.80 cents. Overnight estimated volume is 2,975 contracts.