DTN Cotton Open: Higher on Trade Talk Hopes

Cotton modules lined up in a gin yard. ©Debra L Ferguson

Overnight, the cotton market was slightly higher as it continues to read positive news stories concerning the U.S.-China trade talks. Both sides continue to suggest a deal, or at least a watered-down version, is close at hand.

Negotiators are trying to bet the December 15 deadline when the U.S. is scheduled to implement new tariffs on Chinese goods. Still, the Chinese are unwilling to mitigate their stance that all tariffs must be lifted before an agreement can be reached.

Thursday morning USDA released its weekly sales and exports, which were weaker than last week’s numbers. A summary of the reports follows:

Net sales of 163,700 bales for 2019/2020 were down 42% from the previous week and 36% from the prior 4-week average. Increases primarily for Bangladesh (65,100), Vietnam (34,500), Pakistan (12,800), Turkey (10,500), and Thailand (6,800). There was a reductions for Hong Kong (900).

For 2020/2021, net sales of 2,200 bales were primarily for Honduras (1,800). Weekly shipments totaled 166,700 bales, which was down 10% from the previous week, but up 15% from the prior 4-week average. Exports were primarily to Pakistan (37,300), Vietnam (36,900), China (17,400), Indonesia (15,300), and Turkey (10,400).

Net sales of Pima totaling 4,500 bales, which was down 52% from the previous week and 69% from the prior 4-week average. Increases primarily for India (2,100), Vietnam (900), Bangladesh (600), Indonesia (400), and Pakistan (400), were partially offset by reductions primarily for Switzerland (300) and El Salvador (100).

Exports of 7,200 bales were down 36% from the previous week, but up 11% from the prior 4-week average. The primary destinations were China (2,400), Vietnam (1,700), Pakistan (1,300), India (400), and Bahrain (400).

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Cumulative U.S. cotton sales have reached 68% of USDA’s current season forecast versus its five-year average of 60%. Expressed in numbers, U.S. sales stand at 10.40 million bales, compared to last year’s 9.70 million bales, and the five-year average of 7.50 million.

Despite the current strong exports-sales pace, domestic ending stocks remains at a ten-year of 6.10 million bales. Next week’s monthly supply-demand report ought to provide some insight into that situation.

For Thursday, close-in support for March Cotton is 64.00 cents and 63.70 cents, with resistance at 65.70 cents and 66.60 cents. Overnight volume is estimated to be 5,517 contracts.

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