Within this week’s series of violent up-and-down sessions, the cotton market is attempting to regain its bullish poise. It has risen some 25% from its non-traditional August harvest low, with the last 10% a vertical run from its December low.
Then after last week’s buy-the-rumor-sell-the fact Phase One trade agreement, it is currently struggling to breathe. Although it is too early in the 2020 season to “call the game”, the market must continue to see positive fundamental news to keep up the bullish pace.
Tomorrow will be the next opportunity for such news, as USDA will issue the latest export sales numbers. In recent weeks, other than during the holiday season of Christmas and New Year’s, that pace has been strong. In fact, current season business has outperformed USDA’s seasonal projections, as well as out-paced the market’s five-year average pace.
Technically, the trend of the market remains up as depicted by its chart. However, no doubt this week’s action has blunted some of the bullish enthusiasm. So far this abbreviated week, spot cotton is down a net 120 points from last Friday’s strong close, with one more session still to go.
Given the overbought condition created by the huge seasonal rally off harvest lows, it may take a lot of back-and-fill action for the market to construct a foundation from which, hopefully, additional highs will be seen.
For Thursday, support for March cotton stands at 68.70 cents and 68.50 cents, with resistance at 71.40 cents and 72.00 cents. Overnight estimated volume is 7,560 contracts.