After its strong surge last week on friendly supply/demand numbers, the cotton market is recoiling lower this Monday morning on Hong Kong troubles. As for the crop report, USDA slashed the U.S. crop about 900,000-plus bales, taking it to 20.82 million. It left exports unchanged at 16.50 million, which resulted in domestic carryout being lowered to 6.10 million bales.
However, the domestic carryout number still rests at a 10-year high. In the world numbers, USDA dramatically cut the crops of India, China, and Pakistan. That action took global carryout to 80.80 million bales, a 3 million bale reduction.
Unfortunately, the weekend news of escalating violence in Hong Kong definitely threw cold water on Friday’s exceptional supply/demand numbers. Supposedly, two students were shot by police and now the entire downtown is on the edge of violence. Also, President Donald Trump indicated he has not agreed to any rollbacks of tariffs on China. His statement, made to U.S. reporters, has led to additional confusion over the phase one part of the U.S./China trade negotiations.
Today is Veteran’s Day and all U.S. government offices are closed. Thus, USDA’s crop progress data will be issued Tuesday at 3 p.m. CST. Moreover, USDA’s weekly Export Sales and Shipments report will be pushed back to this Friday morning at 7:30 a.m. CST.
For Monday, support for December cotton lies at 63.45 cents and 62.00, with resistance at 65.10 and 66.00. Overnight estimated volume is 11,625 contracts.