The cotton market opened moderately lower amid the on-going 2019 harvest and Hong Kong unrest. This week saw fairly decent weather across the cotton belt allowing producers to run their pickers on Thanksgiving Day. Come next Monday, the trade will see how far the harvest has advanced. This past Monday, USDA reported the crop was 78% gathered.
The other big news, potentially detrimental to U.S. cotton, is the political events surrounding Hong Kong. Recently, the U.S. Congress passed legislation supporting the pro-democracy movement to the outrage of Chinese leaders. Of course, the bill is nothing more than symbolism, but still Beijing sees it as interference in domestic affairs. President Trump hesitated to sign it, not wanting to upend the U.S.-China trade talks.
However, he did sign it before his secret Thanksgiving run to Afghanistan, causing Beijing huge anger and consternation. If some sort of trade deal is not signed soon, U.S. farmers, especially grain producers, will miss out on sales to China as South America’s cotton and grain crops become available over the Winter.
USDA reported better weekly sales and exports this morning. Net sales of 281,500 bales for 2019/2020 were up 24% weekly, and 33% on the 4-week average. Top buyers included Vietnam (74,100), Turkey (67,800), Bangladesh (46,400), Malaysia (39,900), and China (39,600), Mexico (67,500 RB).
For 2020/2021, net sales of 23,800 bales for Malaysia (14,100), Thailand (5,300), Japan (2,600), and Indonesia (1,800). Weekly Exports were 184,400 bales, up 34% weekly, 36% on the 4-week average. Shipments were to Vietnam (37,200), Pakistan (28,700), Mexico (21,300), Indonesia (19,900), and China (18,300).
Net sales of Pima totaled 9,200 bales. That amount was up 30% weekly, but down 48% on the 4-week average. Increases were primarily for China (2,100), India (2,000), Peru (2,000), Turkey (1,600), and Vietnam (900). Pima Exports of 11,200 RB were up 915 weekly, and up noticeably on the 4-week average. The primary destinations were India (4,000), Vietnam (3,700), Indonesia (1,000), Turkey (900), and Pakistan (900).
For Friday, support for March cotton lies at 64.75 cents and 63.70 cents, with resistance at 66.20 cents and 66.50 cents. Volume thus far for today’s abbreviated session stands at 1,660 contracts.