After posting new highs for the move, the cotton market is lower Tuesday morning. The market was pumped higher by the potential ferocity of Sally yesterday, but it seems that it may not be a major event. This is something of a buy-the-rumor-sell-the fact situation, and cotton is in a small retreat. Of course with hurricanes, things can and do change.
On Monday, the U.S. began blocking imports from four companies and a textile facility in northwestern China suspected of using forced labor in their manufacturing operations. Those Chinese companies which export clothing and other cotton goods, computer parts and hair products from the Xinjiang region were named in the order issued by U.S. Customs and Border Protection.
The province is where Uighurs and other minorities have been held as slave labor to produce goods for exports to the U.S. and the world. China denies the human rights violations saying minorities are participating in a “voluntary assimilation campaign”.
Monday, USDA published its latest crop condition data. The report showed the national crop stands at 45% good/excellent, which was steady with last week’s ratings. The ten-year average is 46% good/excellent. Specifically, Texas is 30% good/excellent, up 1% over last week, with a ten-year average of 36% good/excellent.
Of immediate concern is the bolls open category. Currently, the states of Alabama and Mississippi lie in the direct path of Sally and are 55% and 54% open respectively. After making landfall, Sally is expected to rain out over the Atlanta and North Georgia areas.
For Tuesday, close-in support for December cotton 65.25 cents and 64.80 cents, with resistance at 67.00 cents and 68.00 cents. The current estimated volume is 7,016.