The cotton market is quietly retreating from its positive session Wednesday as new cases of coronavirus increased markedly overnight. China’s Hubei province reported an additional 15,000 new cases in contrast to around 2,000 new cases reported Wednesday.
The reason for the massive jump was Chinese health officials widened their definition used to confirm cases. The World Health Organization warned yesterday the outbreak “could still go in any direction”.
Thursday morning’s USDA report showed another massive round of sales. The summary follows:
Net sales of 350,900 bales for 2019/2020 — a marketing-year high — were up 6% from the previous week and 15% from the prior 4-week average. Increases primarily for Vietnam (152,000), Turkey (74,000), Pakistan (49,300), Bangladesh (44,200), and Indonesia (20,500), were offset by reductions primarily for China (48,400).
For 2020/2021, net sales of 57,300 bales were for Bangladesh (26,200), Pakistan (18,500), Malaysia (6,600), Indonesia (5,300), and Ecuador (700). Weekly shipments were 400,500 bales, which was down 45 from the previous week, but up 205 on the four-week average.
Exports were primarily to Pakistan (93,400), Vietnam (81,500), Turkey (63,100), China (52,200), and Bangladesh (36,200). Net sales of Pima totaling 10,900 bales were up 98% weekly, but down 42% on the four-week average. Increases primarily for India (5,200), Egypt (2,200), Turkey (1,200), Thailand (1,000), and Italy (800).
Exports of 7,400 RB were up 28% weekly, but down 10% on the four-week average. The primary destinations were India (2,100), Pakistan (1,500), El Salvador (900), Peru (900), and Bangladesh (800).
It is interesting to note how China’s domestic businesses seems to be suffering. There are reports of impending steel shortages and other supply chain disruptions in relation to food and medical supplies. Auto sales in China are reported down around 20%, and crude oil demand in the first quarter of this year is forecast to hit the slowest rate of growth in 10 years, all due to the coronavirus outbreak.
For Thursday, support for March cotton stands at 67.10 cents and 66.75 cents, with resistance at 68.70 cents and 69.40 cents. Overnight estimated volume at 15,850 contracts.