Cotton Up on US-China Trade Framework

The cotton market is moderately higher as news that the U.S. and China have come to tentative and acceptable trade terms was announced. Over the weekend, U.S. and Chinese negotiators met in Malaysia to hammer out a beneficial framework relating to tariffs, rare earths, and agricultural commodities. Presidents Trump and Xi are expected to meet later this week to finalize the deal.

The U.S. dollar is slightly lower Monday, as it is coming off a 6-day rally against the Yen and a 3-day losing streak versus the euro. Investors are bracing for a week packed with central bank meetings and trade negotiations. To the former point, the Federal Reserve is meeting this week, with its interest rate decision to be announced Wednesday.

The U.S. government shutdown remains on-going, although there is mounting pressure for the Democratic holdouts to cave. Supposedly this weekend, the first of November, will see many of the government’s social assistance programs come to a halt.

Crude oil is lower Monday, amid the belief that global demand will remain subdued. Treasury Secretary Scott Bessent said on Sunday the U.S. and China had hashed out a “substantial framework” for a trade deal that could avoid 100% U.S. tariffs on Chinese goods and achieve a deferral of China’s rare-earth export controls in trade discussions this week. The announcement has boosted global stock markets as well as certain agricultural commodities but has had a negative effect on such safe-haven markets as gold and bonds.

Daily chart support for December cotton stands at 64.10 cents and 63.80 cents, with resistance at 65.50 cents and 66.00 cents. Monday morning’s estimated volume is 22,488 contracts.

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