The cotton market is chopping about Tuesday morning as it awaits new market developments. Overnight events in Hong Kong continue to reflect violence as pro-democracy protesters clash with police. After 27 consecutive weeks of destruction, one gets the feeling Beijing is long weary of this upstart uprising.
Yet, if China were to unmercifully crush the movement, it would cast the government in a very negative light in the eyes of the world. Currently, the civil unrest in Hong Kong has the city on the verge of shutting down. Just this past weekend, police shot two protesters and arrested hundreds.
There have been no new turns in U.S./China trade negotiations. To our knowledge, there has been no announcement of the time and location for the next face-to-face meeting between the world’s two largest economies. Tuesday, President Donald Trump is scheduled to give a speech to the Economic Club of New York; there he may offer new insights and comments on trade, impeachment, and the 2020 election.
Speculators are increasing their net-short position in cotton. From their summer peak of 49,000 contracts short, a record net position, they dwindled down to roughly 4,000 short at the outset of harvest. Then the group increased up to 6,000 contracts net short; the latest government data has them tagged at 15,000-plus short contracts. Until they are convinced of the error of their bearish ways, they are apt to maintain their course of selling rallies.
Oddly, there is talk Pakistan may import some cotton from India. This is a strange event as Pakistan and India are not the best of neighbors. However, Pakistan has also indicated she may bring in more U.S. and Brazilian bales to make up for her weak 2019 crop.
For Tuesday, support for December cotton lies at 63.42 cents and 62.00 cents, with resistance at 65.00 cents and 66.00 cents. Overnight estimated volume stands at 16,145 contracts.