A strong recovery in the U.S. stock markets Tuesday encouraged cotton to post a near triple-digit close. Strong earnings from the likes of Apple continue to rally the Dow Jones Wednesday morning, which in turn is bullishly helping the cotton market. Thus, from its low of Monday, spot March cotton has snapped up nearly 300 points.
Mainland China markets remain closed for the Lunar New Year holiday, but Hong Kong’s stock market did open Wednesday and closed lower. While the Wuhan virus outbreak is nowhere contained, public comments from Chinese President Xi indicating the government’s full force to combat the contagion has somewhat eased global markets. Still that perception could change.
The Federal Reserve’s Open Market Committee (FOMC) will announce its economic policy Wednesday afternoon at 2 p.m. EST. That statement is expected to show no change in U.S. monetary policy. However, there has been some vocalized concern over short-term credit funding for banks. In past months, those overnight “repo rates” became unstable, causing overnight lending rates to briefly spike.
Thursday at 8:30 a.m. EST, USDA will issue its latest weekly export sales report. Although current crop year sales have been brisk, the market needs to see a measurable uptick in shipments. Winter has long been dubbed the “shipping season”, but last week’s exports were off. Notably, it would be friendly to see China with bigger import numbers for U.S. cotton.
For Wednesday, support for March cotton lies at 69.90 cents and 69.75 cents, with resistance at 71.00 cents and 71.30 cents. Overnight estimated volume stands at 6,585 contracts traded.