By admin       2019-05-14

The cotton market is sharply lower Monday morning as the hangover from last week’s abrupt ending to the U.S.-China trade talks has sent most financial and global markets down. The Dow Jones is already off some 500 Dow points and cotton off some 250 points. The bearish circus continues.A couple of nuances to know is (1) July cotton is under December, which is bearish to demand, (2) December cotton is essentially trading harvest prices, and the crop is not even planted. In fact, we’re not sure if it’s even 50% planted. Monday afternoon, USDA will update the planting progress in its weekly report.Another hope for cotton, old crop sales have been running dead-on to USDA’s seasonal target, so we have to think these much cheaper prices are generating additional sales business. Friday’s monthly supply-demand report did no favors for the market.In fact, despite a hefty jump in potential exports, domestic ending stocks are approaching 11-year highs at 6.3 million bales. If normal growing weather prevails across the Northern Hemisphere, crops and supplies will only swell.Interestingly, as of May 5, records show managed money speculators have moved from a net long to net short position. Last week that group sold some 15,000 contracts. Given Monday morning action, suggestively, they are all the more embedded short.For today, support for July cotton is 67.55 cents and 66.70 cents, with resistance at 70.30 cents and 72.25 cents. Overnight estimated volume stands at 27,400 contracts.

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