DTN Cotton Open: Lower In Muted Trade

Cotton coming up in rolled cover crop. Photo: Bill Robertson, University of Arkansas

The cotton market continues to trade sideways as it awaits Friday’s weekly export sales data along with weighing all of the China news. That news includes China’s passage of a new security law over Hong Kong.

These actions have upset the world, especially the U.S. Besides dragging their feet on full implementation of the Phase One Trade deal, this harsh law is causing another ripple in the U.S.-Sino relationship.

As mentioned, Friday at 8:30 a.m., USDA will issue its holiday-delayed export sales report. As the relationship between the U.S. and China deteriorates, such parting may be reflected in the sales numbers. China has been the dominant buyer of U.S. cotton for four consecutive weeks, but with each passing week the potential to see reductions and/or cancellations increases.

The 6/10 day forecast calls for above normal temperatures and below normal rainfall from Texas, across the Delta, and into the Southeast. USDA just reported the 2020 crop is over 50% planted, which is even with the 5-year average. However, June 1 marks the beginning of hurricane season, and all eyes are on the Tropics and the Atlantic Basin.

The U.S. economy continues to show the negative effects of the coronavirus. Thursday morning weekly jobless claims saw 2.10 million new unemployment applications, while first quarter GDP came in at 5%. However, durable goods at minus 17% was slightly better than analysts’ expectations.

Next Friday, the Labor Department will issue its key jobs data. Strangely the Dow Jones is trading above 25,000, even with 30% of the U.S. workforce not working.

For Thursday, close-in support for July cotton stands at 57.50 cents and 56.90 cents, with resistance at 59.45 cents and 60.00 cents. Current estimated volume is 2,420 contracts.

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