DTN Cotton Open: Lower on China, Charts

Texas no-till cotton in corn residue. Photo: Larry Stalcup, AgFax Media

The cotton market is down Friday as the U.S./China relationship sours. At China’s People’s Congress, officials indicated they won’t issue guidance on 2020 economic growth, acknowledging the severe economic damage inflicted to the economy.

Moreover, Chinese banking authorities have said there is no new policy to stimulate the Chinese economy. Such news suggests more consumer pain for Chinese citizens. This new twist spooked the global markets lower, along with crude oil Friday morning.

Sales have reached 117% of USDA’s forecast for 2019/2020 season versus its five-year average of 102%. China was the noted buyer this week, with 153,000 bales bought in the old crop, and 79,000 purchased for the new crop.

Studying China’s situation, as far as actual exports, they are ahead of last year, but still lags behind the five-year average even with a record amount of total commitments on the books. Numerically, China stands at 2.36 million bales of undelivered cotton versus 1.198 million a year ago, compared to the five-year average of 998,000 bales.

Seemingly, such data opens the door for possible cancellations.

With Memorial Day this coming Monday, the cotton market will be closed. Thus comments will resume next Tuesday morning.

For Friday, support for July cotton is 56.70 cents and 56.00 cents, with resistance at 58.70 cents and 59.85 cents. Current estimated volume is 5,485 contracts.

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