The cotton market has been the beneficiary of a record stock market, expectations for lower 2020 acres, and the possibility China will still emerge as a substantial buyer of U.S. cotton. Thus, the ICE Futures’ charts continue to look decent.
Friday, USDA will issue its holiday-delayed export sales data. Of late, the market has seen record sales and shipments for the 2019/2020 season. In fact, current season activity has gone beyond USDA’s original forecast.
Friday is also the final day for producers to square up their cash positions ahead of Monday’s delivery period for basis spot March cotton. By Friday’s close, producers must have fixed or rolled their positions forward.
Overnight, China’s central bank lowered its one-year loan prime rate to 4.05% from 4.15% and the five-year loan rate to 4.75% from 4.80%. The move was done in an effort to keep the world’s second-largest economy stable against the negative impact of the Covid-19 virus.
Talk is China’s manufacturers are running out of needed raw materials, causing some Chinese factories to close their doors. This situation is adversely affecting the global economy and underscores just how significant China has become to the world’s supply system.
For Thursday, close-in support for March Cotton lies at 67.85 cents and 67.25 cents, with resistance at 69.10 cents and 69.90 cents. Overnight estimated volume is 8,245 contracts.