Another day in the cotton market brings another day of new contract lows. The 2019 crop seems to be thriving, while the U.S.-China trade negotiations are virtually at a halt. (Check our cotton letter for reasons why), so the market lacks any real impetus to halt, much less turnaround.
USDA reported slow sales and export business for last week. The report is as follows:
Net sales of 54,000 RB for 2018/2019 were up 1 percent from the previous week and 46 percent from the prior 4-week average. Increases were primarily for Vietnam (34,400 RB, including 100 RB switched from Japan), India (11,900 RB, including decreases of 1,000 RB), Indonesia (3,300 RB, including 100 RB switched from Japan), Bangladesh (3,300 RB), and Malaysia (2,600 RB, switched from Indonesia).
Reductions were for Thailand (4,900 RB), El Salvador (1,200 RB), and Japan (600 RB). For 2019/2020, net sales of 218,900 RB were primarily for Vietnam (100,900 RB), India (33,700 RB), Turkey (18,700 RB), Guatemala (18,000 RB), and Pakistan (9,800 RB).
Exports of 310,300 RB were down 7 percent from the previous week and 6 percent from the prior 4-week average. Exports were primarily to India (89,200 RB), Vietnam (57,100 RB), Turkey (33,500 RB), Bangladesh (27,100 RB), and Mexico (14,500 RB). Net sales reductions of Pima totaling 5,300 RB–a marketing-year low–resulting in increases for Switzerland (1,300 RB), Pakistan (700 RB), Indonesia (200 RB), Bangladesh (200 RB, including 100 RB switched from Switzerland), and Thailand (100 RB), were more than offset by reductions for China (7,500 RB) and Japan (200 RB).
For 2019/2020, total net sales of 500 RB were reported for India. Exports of 11,400 RB were up 6 percent from the previous week, but down 28 percent from the prior 4-week average. The destinations were primarily to India (4,400 RB), China (4,400 RB), Bangladesh (1,600 RB), Vietnam (300 RB), and Peru (200 RB).
The report offers numerical evidence China was not, and apparently plans not to be participant in the U.S. cotton trade. As of now, the trade talks are at an impasse, as China wants all U.S. tariffs lifted before seriously considering a deal.
For today, support for December cotton is not established as it has posted, yet again, new contract lows. Resistance stands at 62.84 cents and 63.44 cents. Overnight estimated volume is 6,740 contracts.
