By admin       2019-06-04

In its failure to work off its oversold condition in late May, the cotton market was left with no choice but follow its path of least resistance which is down. Overnight the December cotton is down some 80 points, and seems to be eyeing the May low of 65.25 cents.In fact, its prices have already traded below the 66.00-cent mark. The continued trade fuss with China is widening, and now with potential trade troubles with Mexico, the attitude of the market is more dour than at any other time this year.Monday afternoon, USDA will issue its latest crop progress numbers. We may see the Southeastern states backing up, as high heat and drought has caused many farmers to halt planting efforts. For example, one large local producer we know shared that normally their operation would be complete, yet they are only 40% planted.On the flip side, West Texas is enjoying totally opposite conditions. There has been a steady diet of timely moisture events, and to that end, is scheduled to receive some one to two inches of rain this week. Such weather activity should heighten the promise of a strong crop lookout for that area.Although sales of U.S. cotton have been strong in the old crop, for the new crop, trade issues are becoming more complicated. There is no trade deal with China, conduct daily state auctions from reserve supply. As of May 23, cumulative sales for 2019/2020 stand at 23% of USDA’s forecast, versus its 5-year average of 17.5% for this time of year.For today, close-in support for December Cotton for today stands at 65.85 cents and 65.25 cents, with resistance at 67.75 cents and 68.40 cents. Overnight volume is a hefty 19,000 contracts traded.

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