Struggling to keep its feet/WTO insanity

Cotton futures continued to trade indecisively in the lower reaches of the recent trading range.  The forthcoming WTO meeting is the first chance to see a public change of tone between the waring parties.  Trump could score a major victory if Xi would just give a little.  At any rate, cotton prices have discounted the trade war to date and all the demand implications between the worlds largest exporter and importer of cotton.  We saw markets of many types oscillate on potential WTO developments during todays US trading time.  When White House trade hawk Peter Navarro was announced as one of Trump’s dining companions with President Xi, the US stock market dipped to daily lows.  A late Wall Street Journal piece espousing a positive outcome between Trump and Xi boosted the market late.

Within the real world of cotton fundamentals, today saw another modest round of Weekly US export sales figures, keeping pace with the final WASDE figure of 15.0 million bales.  Despite the consistently poormouthing by merchants regarding demand, there is still meaningful business done every week by someone.  As usual, we guess much of the new business has been done on-call and has yet to produce a futures trade to fix price.  Below is the latest from the CFTC on unfixed on-call purchases and sales.  Despite the additional 6,281 unfixed producer positions (most likely rolls forward from December18) the unfixed current crop position is heavily skewed to the mill/consumer.  In fact, the skew is now 75,701 contracts (7.57 mb).  While this is normal for this time of the marketing year, so are seasonal lows and rising markets over the next few months.

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We expect more intraday volatility tomorrow as expectations for progress at the WTO meeting will be all over the place tomorrow.   The daily chart for the CTH9 is looking more and more supportive in recent days, posting 3 straight reversal patterns off recent lows.  We would lean towards a pop higher on WTO optimism tomorrow.

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