With several potentially market-moving events unfolding Thursday, the cotton market is “sleeping like an undisturbed baby”.
First up are USDA’s weekly sales and exports data. In a nutshell, they were slightly bearish.
A summary follows: net sales for 2019/2020 were 188,000 bales, up 6% from the previous week and 53% from the prior 4-week average. Increases were primarily for Pakistan (137,300), Vietnam (37,500), South Korea (7,900), Indonesia (5,200), and India (3,300). Reductions were for El Salvador (7,400), Mexico (400), and Malaysia (200).
For 2020/2021, total net sales reductions of 5,300 bales were for El Salvador. Exports of 149,100 bales were down 4% from the previous week and 10% from the prior 4-week average. Exports were primarily to Vietnam (31,800), China (17,900), Bangladesh (14,700), Turkey (12,600), and India (10,100).
Net sales of Pima totaling 9,600 bales were up noticeably from the previous week and up 14% from the prior 4-week average. Increases were primarily for Pakistan (5,200), Peru (1,800), India (1,200), Japan (600), and Turkey (500). Exports of 10,300 bales were down 17% from the previous week, but up 51% from the prior 4-week average. The primary destinations were India (4,100), Vietnam (2,200), Germany (900), Bangladesh (900), and Thailand (800).
Soon to follow will be USDA’s monthly supply-demand data for October. Industry expectations call for a slight reduction to the 2019 crop, and again to exports. Thus domestic ending stocks may not budge that much
The story of the day relates to the U.S.-China trade talks. Due to souring political events, the Chinese delegation will be in Washington for one day only. Apparently, there was no movement on the main items of contention among those deputy negotiations, and like the time before the Chinese will exit early. This latest twist can cast a negative cloud over the trade talks, and roiled the financial markets.
For today, support for December cotton stands at 61.50 cents and 60.90 cents, with resistance at 63.00 cents and 63.50 cents. Overnight estimated volume is 3,033 contracts.