DTN Cotton Open: Higher on U.S.-China Tariff News

Photo: USDA

The cotton market is moderately higher after overnight news suggested the U.S. and China are potentially agreeing to lift certain tariffs on each other, in coordinated amounts and times. This new understanding came about after the original U.S.-China talks were cancelled by Chile, and then could not be scheduled again until sometime in December. It is expected both President Xi and Trump will attend to sign the Phase One portion of the overall U.S.-China trade deal.

In other news, USDA released its weekly sales and exports report. A summary of the report follows: Net sales of 164,500 RB for 2019/2020 were up 52 percent from the previous week and 2 percent from the prior 4-week average. Increases primarily for Pakistan (95,100), Vietnam (45,100), Turkey (33,200), China (23,500), and Bangladesh (14,500), were partially offset by reductions primarily for Indonesia (65,900) and Hong Kong (2,400).

For 2020/2021, net sales of 118,600 bales were for Indonesia (70,500), Vietnam (44,000), and Japan (4,100). Exports of 129,700 RB were down 13 percent from the previous week and from the prior 4-week average. Exports were primarily to Pakistan (21,600), Vietnam (17,900), China (14,400), Indonesia (12,800), and Mexico (9,800).

Net sales of Pima totaling 30,000 RB–a marketing-year high–were up 38 percent from the previous week and up noticeably from the prior 4-week average. Increases primarily for India (22,000), Pakistan (4,900), Vietnam (2,400), El Salvador (600), and Italy (200), were offset by reductions for Japan (300).

For 2020/2021, total net sales of 32,500 bales were for India. Exports of 5,500 bales were down 27 percent from the previous week and 37 percent from the prior 4-week average. The primary destinations were India (4,300), Indonesia (700), and Turkey (300 ).

Friday, USDA will issue its monthly supply-demand data. Expectations call for nearly unchanged levels on production, but a slight decease in ending stocks. Additionally, options for December cotton will expire Friday.

For Thursday, support for December Cotton lies at 63.45 cents and 62.75 cents, with resistance at 65.00 cents and 66.00 cents. Overnight estimated volume is 18,562 contracts.

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