The cotton market briefly beached the 60-cent mark as USDA reported better business for last week. The report is as follows: Net sales of 329,100 RB for 2019/2020 were primarily for Bangladesh (120,400 RB), Vietnam (76,700 RB, including 400 RB switched from Japan), Turkey (41,900 RB, including decreases of 800 RB), Mexico (21,300 RB), and Malaysia (16,900 RB).
Reductions were reported for China (13,300 RB). For 2019/2020, net sales of 151,200 RB were primarily for China (117,900 RB), Mexico (16,300 RB) and Vietnam (14,500 RB). Exports of 274,200 RB were primarily to Vietnam (57,700 RB), India (46,500 RB), Turkey (43,500 RB), Bangladesh (30,500 RB), and Indonesia (21,500 RB).
Net sales reductions of Pima totaling 3,800 RB resulting in increases for Thailand (400 RB), Japan (100 RB), and India (100 RB), were more than offset by reductions for Bangladesh (4,400 RB). Exports of 12,500 RB were primarily to India (4,400 RB), Thailand (2,400 RB), Pakistan (2,000 RB), and Indonesia (1,000 RB).
Technically, the market is oversold and is begging for a reason to rally. To that end, speculators are record net short, and the weather across much of the Cotton Belt is adverse to the crop’s development. The 6-10 day forecasts for West Texas calls for much above normal temperatures and no rain. Other forecasts have the Southeast with above normal temperatures and normal rainfall. Still, even the southern crop is going backwards. USDA will issue another crop condition number Monday at 4pm.
China has announced intentions to respond in kind to the implementation of U.S. tariffs on September 1. As of today, how China plans to retaliate has not been revealed. So despite the U.S. delaying some tariffs on some Chinese imports, this has not calmed the situation. As of now, there are no scheduled trade meetings during September.
For today, support for December cotton is 59.10 cents and 57.55 cents, with resistance at 60.50 cents and 61.70 cents. Overnight estimated volume is 7,089 contracts.