Despite Tuesday’s friendly supply-demand numbers, the cotton market is nervously lower today. It slashed the US crop another 600,000 bales to take it to 20.21 million bales, which in turn lowered domestic carryout to 5.5 million bales. Moreover, there were substantial cuts to several major foreign producers, which resulting in a 500,000 bale decline in world ending stocks. They now stand at 80.32 million bales.
However, concerns about this weekend’s deadline for additional U.S. tariffs on China are weighing on the market. This Sunday, a 15% tax increase on $160 billion of Chinese imports is scheduled. The two sides have been feverishly negotiating to beat the deadline, as it is believed if the tariffs do become active then all momentum for a trade deal this year will be lost.
The Federal Reserve will announce its interest rate policy at 2 p.m. EST Wednesday. It is unlikely the Fed will take no action on rates.
Thursday, USDA will issue its latest weekly sales and exports. Last week’s numbers were off pace, but overall current year sales are above the 5-year average.
For Wednesday, close-in support for March cotton is 65.13 cents and 63.78 cents, with resistance at 66.50 cents and 67.10 cents. Overnight estimated volume is 2,283 contracts.