Overnight, the cotton market is slightly lower as it tries to gather its gains. Thursday, the market defied both a bearish weekly sales and export report, and negative supply-demand data, to rally on the hopes of a U.S.-China trade deal. The market was encouraged by President Trump’s delaying of certain additional tariffs until mid-October, and Chinese inquiries into U.S. Pork and Beans (pun intended).
However, post-close the administration came out and said there would be no interim deal done with China, and re-affirmed the scheduled talks for October. Still, there is the hope of renewing trade with the most populous country and the number two economy.
December cotton is attempting to hook several highly watched moving averages bullish, even though such a technical event would be seen as bullish and a discouragement to the heavily sold-sold shorts. Yet it takes a tremendous amount of buying energy to produce such a chart turn. To that end, such attempts often fail and renewed selling occurs.
Traders are watching a tropical depression as it moves towards Florida. It is expected to achieve hurricane status, and will be named Humberto. It is too soon to tell if any southern cotton fields are at risk. Interestingly, producers in those areas could use a decent rain on their late-planted cotton, just not the devastating winds that will twist the stalks.
For Friday, support for December cotton stands at 60.40 cents and 59.60 cents, with resistance at 63.90 cents and 64.70 cents. Overnight estimated volume is 7,081 contracts.