The cotton market started higher on Thursday. News that the U.S. and China will meet in October to commence new trade dialogue has improved sentiment and attitudes. The aim is to work towards a trade agreement, and the announcement has the Dow Jones up 200 points with many other markets, including cotton, tagging along.
The market initially assumed the worst about Hurricane Dorian, but now it is beginning to believe much of the Southeastern cotton crop will be spared. However, the mid-Atlantic states – including South Carolina, North Carolina and Virginia – remain in the path, and therefore in jeopardy.
USDA’s weekly sales and exports are delayed until Friday due to the Labor Day holiday on Monday. Despite the deepening trade war with China, cotton sales to the world have been fairly decent. Obviously, over the course of the trade war, new business relationships and trading flows have and are being developed. Tomorrow’s sales and exports data come at 8:30 a.m. EST.
The most recent commitment-of-traders data indicates managed speculative funds are net short some 40,000 contracts compared to their previous position of net-short 47,400 contracts. As a trading group, speculators became record net short the market soon after the Easter high.
For today, support for December cotton lies at 57.90 cents and 57.55 cents, with resistance at 59.50 cents and 60.40 cents. Overnight volume stands at 3,066 contracts.