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DTN Closing Cotton            05/22 16:31

   Cotton Falls for Third Straight Day as U.S.-China Trade Tensions Rise

   July cotton futures finished down a modest $0.45 for the week as trade talk 
centered on the war of words between the U.S. and China.

Dana Mantini
Senior Market Analyst

   July cotton futures finished down a modest $0.45 for the week as trade talk 
centered on the war of words between the U.S. and China. After rising for five 
of the past six weeks, July cotton ran into major resistance at 60 cents. The 
market still finished the week a solid 9 cents above the season low set in 
early April.

   China stated that for the first time in years that it would offer no 
guidance on expectations for their economy, a sure sign that severe economic 
woes from both COVID-19 and African swine fever have been the result, certain 
to impact demand. That, along with rising threats of retaliatory tariffs 
between the U.S. and China, pressured the market. Despite that, Chinese 
authorities insist that China intends to adhere to phase one commitments.

   Cotton export sales last week were 128,900 running bales (rb) for 2019-20, 
and even though a major portion was for China, sales were down 46% week on 
week. Net sales of 120,000 rb for 2020-21 were comprised of 79,200 rb for China 
as well. Exports of 252,000 rb and up 4% on the week, included 64,100 rb to 
China.

   Technically, July cotton ran into some serious resistance at 60 cents, with 
much more formidable resistance just above at 62 cents. The futures market 
appears to be getting a bit overbought and due for a correction. The Cotlook A 
Index from May 21 was down 1 at 66.35 per pound.

   Dana Mantini can be reached at Dana.Mantini@dtn.com 




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