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DTN Morning Cotton Commentary 05/22 08:22
Cotton Lower on China, Charts
The cotton market is down Friday as the U.S./China relationship sours.
Keith Brown
DTN Columnist
The cotton market is down Friday as the U.S./China relationship sours. At
China's People's Congress, officials indicated they won't issue guidance on
2020 economic growth, acknowledging the severe economic damage inflicted to the
economy. Moreover, Chinese banking authorities have said there is no new policy
to stimulate the Chinese economy. Such news suggests more consumer pain for
Chinese citizens. This new twist spooked the global markets lower, along with
crude oil Friday morning.
Sales have reached 117% of USDA's forecast for 2019/2020 season versus its
five-year average of 102%. China was the noted buyer this week, with 153,000
bales bought in the old crop, and 79,000 purchased for the new crop. Studying
China's situation, as far as actual exports, they are ahead of last year, but
still lags behind the five-year average even with a record amount of total
commitments on the books. Numerically, China stands at 2.36 million bales of
undelivered cotton versus 1.198 million a year ago, compared to the five-year
average of 998,000 bales. Seemingly, such data opens the door for possible
cancellations.
With Memorial Day this coming Monday, the cotton market will be closed. Thus
comments will resume next Tuesday morning.
For Friday, support for July cotton is 56.70 cents and 56.00 cents, with
resistance at 58.70 cents and 59.85 cents. Current estimated volume is 5,485
contracts.
Keith Brown can be reached at commodityconsults@gmail.com or by calling
(229) 890-7780.
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