The cotton market is lower Friday morning as some traders are exiting their long positions ahead of the three-day MLK holiday. In addition, given all the political turmoil unfolding in Washington as well as across the nation, other traders are also less inclined to buy the market ahead of the long weekend. Still the market has seen some ample gains this week with decent fundamentals.
One supporting fundamental was Thursday’s weekly export sales report. Thus far, cumulative sales for 2020/21 have reached 11.864 million bales, up from 11.626 million last year at this time and the highest since 2010/11. Sales have reached 84% of the USDA’s forecast for the marketing year versus a five-year average of 71%. Of course, going forward into 2021, if the U.S. dollar further deteriorates, as likely it will, exports may become all the more enhanced.
However, the market has new concerns about futures trade with China. This week the U.S. expanded its ban on cotton and cotton products, among others, originating in the Xinjiang region based on allegations the Chinese are using slave labor mostly from its Uighur Muslim minority.
For Friday, close-in support for March cotton is 80.20 cents and 79.75 cents, with resistance at 82.00 cents and 82.50 cents. The current estimated volume is 6.500 contracts.