The cotton market saw follow-through buying overnight based mainly on the idea the U.S. and China are talking trade. This December, the Phase One Trade Agreement, negotiated by the Trump Administration, expires, so the U.S. and China are wanting to extend the deal. However, China would like all tariffs lifted.
USDA reported strong sales, but bearish shipments Thursday morning. The government’s website summary is as follows:
Net sales of 360,800 RB for 2021/2022 were down 8 percent from the previous week, but up 6 percent from the prior 4-week average. Increases primarily for China (186,700 RB, including 4,400 RB switched from Vietnam and decreases of 5,300 RB), Turkey (149,200 RB), India (5,700 RB), South Korea (4,300 RB), and Mexico (3,900 RB), were offset by reductions for Ecuador (200 RB).
Total net sales of 20,000 RB for 2022/2023 were for China. Exports of 63,400 RB — a marketing-year low — were down 46 percent from the previous week and 49 percent from the prior 4-week average. The destinations were primarily to Pakistan (12,600 RB), Vietnam (11,200 RB), Turkey (8,800 RB), China (8,500 RB), and Mexico (7,800 RB).
Net sales of Pima totaling 8,500 RB were down 65 percent from the previous week and 45 percent from the prior 4-week average. Increases primarily for India (4,800 RB), Peru (1,900 RB), China (900 RB), Thailand (500 RB), and Japan (300 RB), were offset by reductions for Colombia (100 RB). Exports of 2,200 RB–a marketing-year low–were down 60 percent from the previous week and 72 percent from the prior 4-week average.
The Commerce Department released its third quarter GDP data and the numbers were terrible. The U.S. economy grew at a mere 2%, its slowest gain of the pandemic-era recovery. Supply chain issues and a marked pullback in consumer spending stunted expansion.
Friday at 4 p.m. EDT CFTC will update its commitments-of-traders data. Managed-money funds, which have been heavily long for months on end, are showing signs of weariness, as they have been reducing their net long position of late.
For Thursday, close-in support for December cotton is 109.00 cents and 107.70 cents, while resistance stands at 116.50 cents and 117.00 cents. The estimated morning volume is 14,909 contracts.