After a sharp downturn, the market is trying to at least consolidate its gains Wednesday morning. Wednesday’s Dow recovery, as well as the current Texas weather outlook, will possibly allow cotton to continue on its upwards path.
While some scattered rain has/is falling across the Texas Panhandle, the severe high heat will continue to melt fields. The latest weather outlooks still reflect above normal temperatures and below normal rainfall for West Texas for the period of July 20th through the 24th.
Thursday, USDA will issue its weekly export sales data, due out at 8:30 a.m. EDT. Of late, sales have been the “darling” of the U.S. cotton trade, but the growing geo-political feud between the U.S. and China is threatening that business. Thus far, China has been the number two buyer of U.S. cotton for the 2019/2020 season. Going forward however, outlooks and attitudes seem to border on the negative.
The U.S. is holding China responsible for the global pandemic, as well as killing Hong Kong’s democratic status. Additionally, there are issues over the international ownership of the South China Sea. Thus, weekly export sales will provide a barometer of the U.S./Sino relationship.
For Wednesday, support for December cotton lies at 61.20 cents and 60.90 cents, with close-in resistance at 63.50 cents and 64.60 cents. The current estimated volume is 1,737 contracts.
