The cotton market is elevated Friday as word that President Trump will meet with the Chinese negotiators has boosted most markets. Prior to this improvement, the Chinese were set to leave late Thursday as no real positive breakthrough had happened. Then, President Trump tweeted late yesterday he would be meeting with the Chinese negotiators.
Now there is some sort of expectation the U.S. and China may sign a “skinny deal”, perhaps allowing China to purchase U.S. farm products. However, failure to arrive at “something” today most likely will result in President Trump hitting China with another round of tariffs come October 15.
USDA lowering of the 2019 crop by some 150,000 bales is being met with skepticism out in the hinterlands. It would seem all the high heat and doughty conditions that hit the market late summer would have caused more lost production than the government indicates. However, history suggests USDA tends to spread out crop losses over several reports to dampen the blow to the market. Thus, the November and December supply-demand reports will be hugely critical.
New weekly export sales were 188,000 for 2019/2020, and a net negative amount of minus 5,300 bales for 2020/2021. The combined result was 183,500 bales. As of October 3, cumulative sales stand at 58% of USDA’s forecast versus a five-year average of 49.7% sold.
Texas is expecting to feel low to freezing temperatures this weekend. No doubt some damage will be done, but given reduced plantings in the Panhandle, crop loss may not be as great as in seasons past.
For today, support for December cotton stands at 61.00 cents and 59.50 cents, with resistance lurking at 63.00 cents and 63.45 cents. Overnight estimated volume is 5,904 contracts.