The cotton market has traded both negative and positive from Tuesday’s close as it tries to sort out what fundamentals are the most important. Of course, the most potentially friendly aspect is the U.S.-China trade talks.
Although China did say yes, and then immediately reneged, there is hope the two sides can finalize and sign the so-called “Phase One” agreement in early November. To that end, deputy level negotiators continue to meet this week and beyond.
A possible negative for cotton may be Turkey’s potential reaction to U.S. tariffs and threats. The Trump Administration feels it was double-crossed by Turkey who promised no invasion of Syria as U.S. troops try to vacate. Yet, Turkey did invade to get at the Kurds, and now the U.S. is responding with economic sanctions. Roughly, the U.S. exports about a million bales of cotton to Turkey.
USDA reported Tuesday the U.S. 2019 crop is 32% harvested. This compares to last week’s 25% pace, and the five-year average of 27% gathered. The current condition of the crop stands at 38% good/excellent. Last week, it was 39% good/excellent, and last year it was 35% good/excellent.
There is a disturbance in the Gulf of Mexico, which bears watching. It may potentially form into something serious within the next five to seven days according to National Hurricane Center commentary.
For today, support for December cotton lies at 61.20 cents and 60.20 cents, with close-in resistance at 64.20 cents. Overnight estimated volume is 4,928 contracts.