The cotton market is trading higher as it builds on its recovery from Monday. Monday saw so many financial and commodities markets sharply lower in response to fears of the Wuhan Virus, but mid-morning, somehow cotton was able to halt its decline, reverse, and stage a comeback.
In fact, spot March actually closed slightly higher. Currently, all cotton contracts are higher as the Dow Jones is attempting to pare some of its 450-point loss Monday.
In terms of normal business, the Federal Reserve’s Open Market Committee (FOMC) meets today and ends Wednesday afternoon with its economic statement. Most analysts are expecting no change in U.S. monetary policy, although the Fed may acknowledge the coronavirus situation as it relates to the U.S. economy.
Other economic news out Tuesday will be the weekly Johnson Redbook retail sales reports, durable goods orders, the S&P/Core-Logic home price indexes, the Richmond Fed business survey, and the consumer confidence index.
As it stands, cotton underlying demand base continues to support stable to higher prices. Traders expect China will soon emerge as a buyer of U.S. cotton under the terms of the freshly inked Phase One trade agreement. Current crop year sales are exceeding USDA’s expectations and projections, which may force the government to increase the exports category in its forthcoming February supply-demand data.
For Tuesday, support for March cotton lies at 68.00 cents and 67.05 cents, with resistance at 70.00 cents and 70.45 cents. Overnight estimated volume stands at 5,475 contracts.