Tuesday morning the cotton market reached its highest price point since January 31. Over the weekend the NCC, meeting in New Orleans, released its membership acres survey which showed a 5.5% potential decline for 2020 acres.
Based on historical abandonment numbers, the 2020 crop is projected to be some 19.80 million bales.
In addition, China’s central bank announced further monetary steps to ease the financial pains of COVID-19 to the Chinese economy. This move is seen as being more inflationary.
To that end, the Chinese government is granting exemptions of some 700 products of U.S. goods, including agriculture and energy to help alleviate immediate shortages caused by the virus.
Friday’s commitment-of-traders report showed certain managed money funds were net buyers for the week ending February 11, thus increasing their net long positions to 33,800 contracts. Generally speaking, the speculator has carried a net-long position since fall harvest.
This Friday is the day before spot March’s entrance into its delivery period. That FND happens this coming Monday, February 24. Producers affected by the deadline must fix or roll to another futures month.
Market analysts suggest the Chinese economy will take a definite adverse hit because of COVID-19. With the virus still unchecked, it is impossible to know how deep the cut will effect China’s economy. With that idea in mind, Apple has said it will miss first quarter earnings, and that news has the Dow Jones flashing triple-digit losses this morning.
For Tuesday, support for March cotton stands at 68.10 cents and 67.20 cents, with resistance at 69.40 cents and 70 cents. Overnight estimated volume is 18,545 contracts.