DTN Morning Cotton Commentary          05/29 08:20

   Cotton Lower on China Worries

   The cotton market is materially lower Friday morning as traders fear what 
President Trump's special news conference might bring.

Keith Brown
DTN Contributing Cotton Analyst

   The cotton market is materially lower Friday morning as traders fear what 
President Trump's special news conference might bring. Sometime today, the 
President is scheduled to respond to China's passage of the new security law 
for Hong Kong. Net-short speculators are back selling into both old and new 
crop markets.

   USDA just issued the weekly export sales data. Although not as dynamic as 
previous reports, it was positive. A summary follows:

   Net sales of 44,600 RB for 2019/2020 were down 65 percent from the previous 
week and 85 percent from the prior 4-week average. Increases for China (58,600 
RB), Vietnam (34,000 RB, including decreases of 6,300 RB), and Germany (200 
RB), were offset by reductions primarily for Pakistan (12,100 RB), Thailand 
(9,200 RB), Turkey (8,800 RB), South Korea (7,400 RB), and Mexico (6,400 RB). 
For 2020/2021, net sales of 171,900 RB were primarily for China (113,200 RB), 
Turkey (24,600 RB), Pakistan (11,400 RB), Thailand (9,700 RB), and South Korea 
(9,400 RB), were offset by reductions for Mexico (4,300 RB). Exports of 267,400 
RB were up 6 percent from the previous week, but down 4 percent from the prior 
4-week average.  Exports were primarily to Vietnam (84,300 RB), China (55,300 
RB), Pakistan (52,900 RB), Turkey (30,500 RB), and South Korea (10,500 RB). Net 
sales of Pima totaling 10,100 RB were up noticeably from the previous week and 
from the from the prior 4-week average. Increases were primarily for China 
(9,600 RB), Turkey (300 RB), and South Korea (200 RB). Exports of 1,400 RB were 
down 70 percent from the previous week and 76 percent from the prior 4-week 
average. The destinations were primarily to Pakistan (700 RB), Vietnam (300 
RB), and India (200 RB). 

   Excluding Friday's export report, cumulative sales for 2019/2020 have 
reached 102% of USDA's original forecast. This strong pace suggests either USDA 
will increase its exports amount on the June crop report, or that the 
government anticipates future cancellations by China. In all likelihood, it may 
be a combination of both.

   For Friday, support for July cotton is 56.00 cents and 55.50 cents, with 
resistance at 59.50 cents and 59.85 cents. Current estimated volume is 7,850 
contracts.

    

   Keith Brown can be reached at commodityconsults@gmail.com or by calling 
(229) 890-7780.




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