After its moderate recovery Thursday, the cotton market is basically steady to higher in overnight trade. Thursday’s upward drive was influenced by the strong move in grains and the fact there was no big cancellation of cotton purchases in the weekly export sales report.
The market is also awaiting the results of the U.S.-China review of Phase One. Reportedly, that meeting will occur Friday or over the weekend. The centerpiece of the Phase One deal was China’s commitment to buy at least $200 billion more in U.S. goods and services over two years on top of its purchases in 2017 in the first half of 2020.
Thus far, according to several economic watchdog organizations, China has bought less than a quarter of the targeted full-year amount of U.S. goods agreed under the deal.
Of late, the U.S.-Chinese relationship has soured as the Trump Administration has been publicly calling China out on its treatment of Hong Kong, alleged espionage efforts in the U.S., and military forays into the South China Sea.
The U.S. dollar continues to weaken as currency traders fear more stimulus from the Federal Reserve will dilute the dollar’s buying power. Interestingly, the U.S. Senate went on its summer recess Friday, meaning no new COVID relief bill will get passed. To that, the Dow Jones is trading lower Friday.
For Friday, support for December cotton is 62.00 cents and 61.76 cents, with resistance at 64.00 cents and 65.05 cents. The current estimated volume is 2,420 contracts.