APRIL 5, 2019

COTTON MARKET RALLIES AGAIN THIS WEEK

• May Cotton Up 64 Points
• Export Sales Provide a Boost
• U.S. and China Economies Show Strength
• Hopeful News on the Trade Front

Prices continued to slowly climb higher this week, setting a new 15-week high today when May futures touched 78.48 cents per pound. Lack of positive news had the market slowly drifting lower through Wednesday. Thursday’s export sales number and news that President Trump and Chinese Vice Premier Liu He would meet in the Oval Office on Thursday raised the energy level enough for May 2019 futures to close 64 points higher on the week at 78.25 cents. Open Interest gained 3,200 contracts to 231,636.

EXPORT SALES

The export sales report for the week ended March 28 may have been one factor that provided the upward momentum carrying the market through to the end of the week. Net new sales for current crop at 322,100 bales were up 47 percent from the previous week. Vietnam led the pack with net new sales of 100,800 bales followed by China with 59,100 bales. Next marketing year sales totaled 151,100 bales.  Shipments rose above the average necessary to hit USDA’s export target for the year. However, accumulated exports still trail behind the average pace.

U.S. ECONOMY

The U.S. economy continued to show strength this week. The U.S. jobs report was better than expected at 196,000 for March payrolls, which is considered by some analysts as showing signs of a healthy labor market and a growing economy. Although February’s report was revised up, it was still only a dismal 33,000. At the closing bell today Dow-Jones Industrials showed 26,425, the highest close since October 9, 2018.

CHINESE ECONOMY

China’s PMI (Purchasing Managers Index) for the manufacturing sector during the month of March showed activity in China picked up to a 14-month high. According to the National Bureau of Statistics in China, the index showed 50.5, up from 49.2 in February. Although other factors contribute to an expanding or contracting economy this is a widely watched gauge. The index had been below 50 for the past several months, and analyst will be looking at next month’s report for a reassuring sign the economy is doing better and not just a seasonal rise.

BREXIT NEWS

Brexit continues to be watched as a source for possible global financial impacts. Britain was scheduled to leave the European Union on March 29, but EU leaders granted a reprieve until April 12. British Prime Minister Theresa May has proposed a delay until June 30, two days before the new European Parliament will meet.

U.S. CHINA NEGOTIATIONS IN WASHINGTON THIS WEEK

Negotiations between the U.S. and China toward resolving ongoing trade disputes moved to Washington this week resulting in hopeful news. President Trump met with Chinese Vice Premier Liu He on Thursday. Afterward, it was widely reported that Chinese President Xi Jinping, through a message conveyed by Liu, told President Trump that both sides have made new and substantial progress on key issues. President Trump was quoted as saying on Thursday “we’ll know over the next four weeks” if they have a deal.

IN THE WEEK AHEAD:

• Tuesday at 11:00 a.m. Central – World Agricultural Supply and Demand Estimates
• Thursday at 7:30 a.m. Central – Export Sales Report
• Thursday at 2:30 p.m. Central – Cotton-On-Call
• Friday at 2:30 p.m. Central – Commitments of Traders