Cotton is lower Tuesday as it finds itself in a counter-Tuesday type trade. The market has been up some 400 points for the month of January, but as the month begins to fade, some liquidation is occurring. Technically the market is overbought, while structurally, the CFTC just reported that speculators are easing out of their net long positions.
The Federal Reserve meets Tuesday and Wednesday to decide monetary policy. Traders expect no action by the Fed. To that end, the U.S. dollar has come off its recent lows and seems to be in a holding pattern. Until new stimulus is passed by Congress, and more COVID vaccinations are done, traders will buy the Greenback as a safe haven play.
USDA will issue its next round of export sales this Thursday. Current sales have surpassed USDA’s original target, and hopefully China will continue to be a major buyer. There are humanitarian concerns raised by the U.S. and Europe that China is using forced labor to work on their farms and factories.
For Tuesday, close-in support for March cotton is 81.30 cents and 80.80 cents, with resistance at 83.10 cents and 83.50 cents. The current estimated volume is 17,115 contracts.