Despite the potential crop threat from Hurricane Dorian, the implementation of steeper Sept. 1 tariffs are dominating the trade. Overnight, the ICE futures opened lower, and then proceeded to trade sharply lower, as rhetoric coming from China and the U.S., continues to unnerve the market.
As it is projected Dorian will likely by pass the Georgia cotton crop, but the Carolina crop may yet be in jeopardy. Forecasters think if Dorian is to make landfall on the continental U.S., it will likely be in the mid-Atlantic States. It was 30 years ago this week, Hurricane Hugo slammed into the Carolinas, causing massive destruction.
Due to the Labor Day Holiday, weekly crop condition data will be out Tuesday afternoon at 4 p.m. ET. The last report indicated the 2019 crop was easing backwards in development. Additionally, weekly sales and exports are delayed till Friday. There again, recent numbers have shown little demand interest, despite the fact the new-crop market has been under 60 cents for essentially six weeks!
Once Dorian passes the Southeastern crop, defoliation efforts will be increasing. Just how large the 2019 crop will be is not accurately known. USDA recently upped the crop some 500,000 bales to 22.50 million, but recent bouts of adverse weather may have reduced the size of the crop, and those reductions may appear on the September crop report. Of course, there is belief USDA overstated its exports outlook, and so if the crop is reduced and exports are cut, then little change will be seen to the U.S. ending stock number.
For Tuesday, support for December cotton stands at 57.40 cents and 56.60 cents, with resistance at 59.30 cents and 60.06 cents. Overnight estimated volume is 4,912 contracts.
Keith Brown can be reached at email@example.com or by calling (229) 890-7780.