The cotton market is essentially trading sideways Thursday morning despite very strong weekly exports sales. Current crop year sales were 326,000, with exports of 274,000 bales. However, the political whirlwinds now blowing in Washington are unnerving traders across all markets. Moreover with a trading holiday on Monday (MLK Day), few may want to initiate new long positions.
A summary of USDA’s report is as follows: Net sales of 326,000 RB for 2020/2021 were up noticeably from the previous week and up 2 percent from the prior 4-week average.
Increases primarily for China (151,200 RB, including 2,900 RB switched from Hong Kong and decreases of 15,400 RB), Pakistan (56,600 RB), Turkey (39,000 RB), Bangladesh (24,300 RB, including decreases of 6,000 RB), and Vietnam (23,800 RB, including decreases of 10,000 RB), were offset by reductions for Hong Kong (2,900 RB) and Malaysia (1,500 RB).
For 2021/2022, net sales of 50,300 RB were for Malaysia (22,000 RB), Guatemala (13,200 RB), Bangladesh (8,800 RB), and Peru (6,300 RB). Exports of 274,600 RB were up 2 percent from the previous week and from the prior 4-week average. Exports were primarily to China (156,800 RB), Vietnam (40,800 RB), Pakistan (26,400 RB), Mexico (11,300 RB), and Turkey (11,000 RB).
Net sales of Pima totaling 35,900 RB–a marketing-year high–were up noticeably from the previous week and from the prior 4-week average. Increases primarily for India (20,700 RB), Vietnam (8,800 RB), China (7,000 RB, including 2,600 RB switched from Hong Kong), Pakistan (1,300 RB), and Thailand (1,300 RB), were offset by reductions for Hong Kong (2,600 RB) and Bangladesh (1,500 RB).
For 2021/2022, total net sales of 400 RB were for India. Exports of 10,300 RB were down 17 percent from the previous week and 37 percent from the prior 4-week average. The destinations were primarily to China (5,200 RB), India (1,700 RB), Pakistan (1,500 RB), Peru (1,000 RB), and Egypt (700 RB).
The U.S. dollar continues to experience short-covering. The market has been in a steep decline reflecting its potential devaluation from government COVID stimulus. However today President-Elect Biden will offer his economic recovery package in which he plans to spend trillions more dollars.