DTN Cotton Open: Market Weighs Delivery, Exports-Sales

After two brutal lower days, the cotton market is seesawing over Tuesday’s settlement. On the market’s agenda this week will be Thursday’s weekly sales and exports, followed by Friday’s delivery period for spot December cotton.

To the former subject, last week’s sales were a marketing-year-high effort, but shipments were slightly off their four-week average. Interestingly, China has been a buyer of U.S. cotton for two weeks, even without a trade deal. If they appear in tomorrow’s data, the psyche of the market may be tweaked.

To the latter subject, Friday is FND (First Notice Day) for spot December. Currently it has an open interest of some 23,000-plus contracts. Obviously, a stout amount of squaring needs to happen over the next two sessions to get traders newly positioned.

In overnight news, China’s central bank eased its one-year loan prime rate to from 4.2% down to 4.15%. The five-year loan rate was lowered from 4.85% to 4.80%. That is the second lowering of interest rates this week by the People’s Bank of China, and most likely these adjustments are happening as a financial counter measure to the U.S. tariffs. Just Tuesday, President Trump publicly said he would enact new tariffs in December if no deal is reached.

Wednesday afternoon the minutes from the last meeting of the Federal Reserve’s Open Market Committee (FOMC) will be released. Traders will be studying the wording looking for clues on the timing of the next monetary policy move by the Federal Reserve.

For Wednesday, support for March cotton will be 64.95 and 63.75, with resistance at 67.00 and 67.25. Overnight estimated volume is 12,699 contracts.

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