The cotton market has traded both sides of Friday’s close as the reality of bearish supply-demand numbers and the weekend Saudi oil field attacks have traders completely confused. To the former point, last week USDA kept domestic stocks unchanged at 7.2 million, but raised world carryout.
However, also last week, conciliatory gestures between the U.S. and China allowed the market to slough off those negative fundamentals to trade nearly limit-up. Monday morning, the Saudi attacks have caused widespread angst across the global financial markets.
Crude oil has traded up nearly $9 per barrel, gold and silver shot higher, and the Dow Jones dropped 150 points. Such hectic trading often leaves agricultural markets vulnerable to declines.
Monday afternoon USDA will issue its latest crop condition/harvest data. Over the past few weeks, the crop has taken backward steps in its development. In fact, much of the Southeastern growing areas are in need of a decent rain to finish out the late-planted cotton.
The market is also waiting on the U.S.-China trade talks next month. Of course, it is the hope of all market participants a trade deal can be agreed upon. The Chinese are feeling economic pressure as well, so perhaps they will be more amenable to a deal.
For today, support for December cotton stands at 61.00 cents and 60.50 cents, with resistance at 63.40 cents and 64.70 cents. Overnight estimated volume is 5,408 contracts.