The cotton market is slightly higher overnight, as it attempts to build upon its technical gains since Friday. Thursday it will face two key fundamental reports which could give additional upside momentum. Early Thursday, USDA will issue its weekly export sales data; the last report was not as dramatically friendly as prior reports.
The hope is not to see delays or cancellations of previously purchased U.S. cotton. Several top U.S. customers have reduced, or fully shuttered, textile factory activities as a means of combating COVID-19.
The other report Thursday is April’s supply and demand updates from USDA. The three key categories to watch are domestic production, exports and Chinese consumption. Of late, global ending stocks have been on the rise as Chinese consumption has declined. It is also expected U.S. production will be slightly lowered and exports increased.
President Donald Trump made some comments on the U.S. dollar Tuesday, touting the strength of the dollar. While a strong currency is a basic positive for any nation, an overly strong currency, such as the U.S. dollar, can be a hindrance to exports of agricultural and manufactured goods and services.
For Wednesday, close-in support for May cotton lies at 52.40 cents and 52.05 cents, with resistance at 55.00 cents. Overnight estimated volume is 11,405 contracts.