Thursday morning has the cotton market again playing defense. It was one week ago when the market received bearish news from its weekly sales and exports report, as well as a negative monthly supply-demand data. However, the market overlooked those reports opting to zoom higher on positive U.S.-China trade comments. Since that time, the Saudi-Iran oil debacle has dominated the news cycle. Thus, the ICE Futures succumbed to early harvest pressures.
However, USDA reported another round of weaker cotton business. Its weekly report is summed as follows:
Net sales of 85,000 bales for 2019/2020 were up 14 percent from the previous week, but down 38 percent from the prior 4-week average. Increases were primarily for Mexico (43,300), Pakistan (20,400), Costa Rica (15,200), Turkey (14,300), and Vietnam (11,000). Reductions were for China (39,300).
For 2020/2021, net sales of 19,300 bales were primarily for Bangladesh (13,200), Colombia (2,300), Costa Rica (2,300), and Mexico (1,100). Exports were 166,600 bales, which was unchanged from the previous week, but down 27 percent from the prior 4-week average.
Exports were primarily to Vietnam (48,400), Indonesia (29,500), Mexico (19,200), China (18,800), and India (10,800). Net sales of Pima totaling 15,900 bales were up noticeably from the previous week and from the prior 4-week average. Increases were primarily for Pakistan (10,200), India (2,800), Bahrain (2,200), and China (700).
Exports of 7,200 bales were up 57 percent from the previous week and 6 percent from the prior 4-week average. The primary destinations were India (3,500), China (1,600), Bangladesh (400), Thailand (400), and Italy (300).
The market may be biding its time to see how the 2019 harvest unfolds, as well as the results of the U.S.-China trade talks. Those talks are scheduled to resume in early October. Failure to arrive at any sort of trade consensus will create additional import duties on each country’s goods and weaken the global economy.