Stronger export sales pushed US cotton prices higher last week.  Prices got a further boost from news that the US and China were on the verge of a trade truce. 

Prices broke above the long standing 67 cent price resistance barrier.

"Don’t look for the market to enter an exciting new breakaway phase.  In fact, I don’t foresee that in the near to mid future.  Yet, one should expect the market to now mount a challenge of the 72-73 cent level, basis May.  Yet, we note that after challenging 68 cents, basis the March contract, the market sold off and finished the week just below 67 cents. There was a two-sided meaning in the weekly settlement slipping below 67 cents.  The new bull remains a bit week and will continue to need care if it is to mature," wrote cotton expert O. A. Cleveland in his weekly market report.

"More importantly, the market finally received a boost from real tariff resolution news and all it could muster was a very short-lived boost of only less than 100 points.  We have warned repeatably that cotton fundamental news had control of the cotton market and soothsayers should no longer expect any price boost from political related news related to tariff resolution. 

"Speculative buying was energized by the tariff resolution announcement, but fundamental reality kicked in and the “tariff price boost” all but evaporated. Don’t expect tariff news to be more than a bit player in the cotton market.  The important activity on the week was that the market was able to finally close above 67 cents (one day only) and settled the week essentially at 67 cents.  Now, the gut-wrenching teeth pulling can begin as the market attempts to move up to the 72-73 cent trading range," he said.

"Note the world’s largest producing countries have experienced significant reductions is crop size while world consumption has remained considerably more stable.  The resulting 3.3 million bale drop in world carryover was the market fundamental that killed the bear and birthed the new bull.  Since its October estimate, USDA now expects a 300-point higher average farm price for the 2019-20 marketing season," said Mr. Cleveland. 

• U.S. export sales and shipments are ahead of the five-year average.  U.S, sales to date remain the second highest on record and are 16% ahead of the prior year’s pace. 


• Significant sales this week were make to Turkey, China, Pakistan, Vietnam, Bangladesh, India, and Malaysia.  Excellent shipments were noted for China, Pakistan, Vietnam and Mexico.  

The most recent export sales report can be viewed at apps.fas.usda.gov/export-sales/cottfax.htm