DTN Cotton Open: Continued Choppy Trade

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

The cotton market continues to trade both sides of unchanged Tuesday morning as it anticipates USDA’s monthly supply-demand report. That data will be released at 11:00 a.m. CST. In November, the government cut both domestic and foreign production, which in turn lowered respective carryouts. Traders are thinking the agency is not done with its downward revision of the 2019 crop.

Monday, USDA reported the 2019 cotton harvest stands at 89% complete. Last week, the pace was 83% gathered. This will be the last harvest progress report issued for this year.

Specifics for Tuesday’s supply-demand report indicate traders are looking for the U.S. crop to come in at 20.59 million bales versus November’s 20.82 million bales. U.S. ending stocks are anticipated to be 6.01 million bales compared to the previous 6.10 million bales, but still a multi-year high.

World ending stocks are expected to be 80.62 million bales versus last month’s 80.80 million bales. On Thursday, the market will see another round of weekly sales and exports.

This Sunday marks the time for additional U.S. tariffs to be implemented on China. If President Trump delays those tariffs, it will be taken as a sign a trade deal is near. However, if they are indeed implemented, then all hopes for a trade deal this year, or early next are possibly dashed.

For Tuesday, close-in support for March Cotton stands at 64.50 cents and 63.70 cents, with resistance at 66.35 cents and 66.90 cents. Overnight estimated volume is 3,048 contracts.

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