The cotton market is lower Thursday morning on weekly net negative sales of cotton for last week. A general summary of the report is as follows:
Net sales reductions of 119,300 RB, a marketing-year low, for 2018/2019 were down noticeably from the previous week and from the prior 4-week average.
Increases reported for India (15,600), Mexico (5,300), Egypt (5,100), Taiwan (3,700), and Indonesia (3,100). Reductions were from Turkey (84,600) and China (69,900). For 2019/2020, net sales were 221,800 bales, primarily for Turkey (98,200), China (49,400), El Salvador (22,500), Guatemala (15,800), and Mexico (10,000).
Weekly Exports were 321,200 bales, down 11 percent from the previous week and 10 percent from the prior 4-week average. Destinations included India (59,200), Turkey (55,700), Vietnam (55,400), China (36,000), and Bangladesh (22,900). Net sales of Pima totaled 4,000 bales, and was primarily for El Salvador (2,200), Bangladesh (1,300), Austria (400), and Turkey (300).
Pima Exports were 19,200 bales, which was up 2 percent from the previous week, but down 2 percent from the prior 4-week average. The destinations were primarily to India (8,500), China (8,300), Turkey (800), Pakistan (400), and Bangladesh (400).
Cotton has also closed higher five out of the past six sessions, mainly on the hopes the U.S.-China trade talks will be rejuvenated next week at the G-20 meeting. It is expected the two leaders, Trump and Xi, will meet and have, what Mr. Trump called, “extensive trade talks”.
China sold some 9,700 tonnes, or about 44,500 bales, from state reserves yesterday. Given the size and consistency of recent auction sales, it is beginning to be accepted China may have better supplies than originally believed.
For Thursday, support for December cotton is 66.50 and 66.10, with resistance at 69.70 and 70.10. Estimated overnight volume is 7,400 contracts.
The Dow Jones is higher Thursday morning, and the U.S. dollar is weaker, following the Federal Reserve’s indication it would lower U.S. interest rates this summer if it felt such a move was warranted. Many traders had been anticipating a Fed hike.