DTN Morning Cotton Commentary 12/14 08:15
Cotton Slips on Poor China Data
Overnight economic news for China indicates a weakening economy.
By Keith Brown
DTN Cotton Contributing Analyst
Overnight economic news for China indicates a weakening economy. Industrial
output was the slowest in three years, and domestic retail sales were the
lowest in fifteen years. Of course, the situation may be worse than we think,
as China has been known not to disclose the full truth when it comes to
internal affairs. At any rate, it is apparent U.S. tariffs are taking a certain
toll on the Chinese economy, as revealed by these numbers today. Yet, the trade
talks are bearing some fruit. China has bought a slug of U.S. soybeans and has
agreed to lift import duties on U.S. autos.
Unfortunately, the immediate situation for cotton remains negative. China
cancelled more old crop sales yesterday, and despite the aforementioned small
progress of the trade talks, we have yet to really hear of cotton as a front
row topic of conversation. Interestingly, world stocks are at an eight-year
low, with China holding 41.5% of the total amount. Thus, with USDA cutting the
Chinese crop in Tuesday's supply-demand data, once the trade war is fully or
partially resolved, China ought to be back in the market. Yet, any sort of
weather adversity come next spring to China's crop may force them back into the
market. The market is forced to mark time until new and different fundamentals
burst on the scene.
For today, close-in support for March cotton today at 79.00 cents, with
resistance at 80.10 cents.
Keith Brown can be reached at email@example.com
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