The cotton market is trying to put on a decent face for a bearish week. Earlier comments from President Trump suggesting the trade deal may have to wait until after the 2020 election sent prices down some 200 points, but the market has staged a small comeback.
Thursday’s sales and exports were okay, and now the market is anticipating more friendly supply-demand data come next Tuesday. Early sentiment suggests a 500,000-bale cut to the U.S. crop may be in order.
Friday afternoon the CFTC will publish its bi-weekly commitment-of-traders report. As they currently stand, managed money speculators are net short some 5,000 contracts. This number is way off from their summer peak of 49,000 contracts. With the right dose of bullish fundamentals, such a moderate trade deal, or a dynamic adjustments to the supply-demand numbers, they could easily sway bullish.
The Labor Department reported a ‘blow-out” jobs number. Expectations were calling for an increase of 183,000 non-farms jobs, but the number released was 266,000 new jobs. The overall unemployment rate remained at its recent historical low 3.6%. The Dow Jones and related stock markets jumped higher on the news.
OPEC and Russia are meeting today to decide on new production cuts. A current number being floated to prop up crude prices is a 400,000 barrel per day cut. Crude oil prices have rallied this week on those expectations.
For Friday, December cotton expires at 2 p.m., but support for the March stands at 64.00 cents and 63.70 cents, with overhead resistance at 66.00 cents and 66.90 cents. Overnight estimated volume is 7,057.