Cotton Struggles to Breathe

The cotton market continues to fall under the weight of fresh speculative selling, harvest pressure and the lack of timely information. The government shutdown has entered its 15th day, with no end in sight. In addition, there remains increased fears of an expanding trade war with China.

Just Tuesday, President Donald Trump said he was considering terminating some trade ties with China, including in relation to cooking oil. The President said, “I believe that China purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers, is an Economically Hostile Act. We are considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution”. Obviously, none of that bodes well for U.S. cotton.

Crude oil is again lower today. Traders saw the International Energy Agency’s prediction of a supply surplus in 2026 and trade tensions between the United States and China as wholesale bearish. Both WTI and Brent oil contracts closed at five-month lows on Tuesday. The IEA suggested the global oil market could face a surplus next year of up to 4 million barrels per day. Such cheap oil could enhance the production of synthetics over cotton in apparels.

The U.S. dollar is somewhat lower today amid Tuesday’s economic comments from Federal Reserve Chair Jerome Powell. The Fed Chair underscored the need to lower rate cuts in coming months to help the U.S. labor market.

Daily chart support for December cotton stands at 62.60 cents and 62.00 cents, with resistance at 64.20 cents and 64.50 cents. Wednesday morning’s estimated volume is 8,710 contracts.

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