The cotton market was lower Monday as weekend harvesting efforts did bring out some fixation selling. To that end, Monday afternoon USDA will report on the latest harvest pace for the 2019 crop. Last week saw the crop was some 32% harvested. Of course, as the harvest deepens, and the cash pipeline becomes full. Merchants will not be so willing to chase prices higher.
There have been some weather delays such as the storms moving across Texas and Tropical Storm Nester, but once those events have cleared out the pace of harvest ought to intensify.
The recent uptrend of the market is being driven by hopes that a U.S.-China deal will happen and the belief USDA is overstating the size of the 2019 crop. To the former, negotiators from both sides are expected to meet in early November at the Asian-Pacific Economic Conference.
President Trump hopes to sign that agreement at that time, although U.S. officials say it will take more time to work out the language and certain other differences. To the latter, fundamental traders expect USDA’s November crop report to reveal an even smaller crop than it originally projected.
This Thursday, USDA will issue its weekly sales and exports data. Of late, weekly sales have increased as current crop sales are running parallel to their five-year average. However, the fear among traders is that China may yet cancelled previous purchases and also that the sheer size on the Northern Hemisphere harvest will cause merchants to buy hand-to-mouth.