The cotton market starts the week lower, trading down to a low of 76.30 so far on the day. Last week we saw sideways trading action with a new recent high of 79.57 posted on Tuesday followed by lower trade until Friday’s recovery. The front months are showing strength on positive Chinese economic news supporting demand. A lower U.S. dollar also helps strengthen the current demand tone. Recently the cotton market has been trending higher due to the current strength in demand but as we look out to the deferred months that could be changing as the potential for a large, new crop supply could turn the market lower. With the current weather outlook, major producing countries could see an increase in supply compared to last year. In the July contract, resistance comes in at 79.61 with support at 77.53 and 75.37. In the near term, Chinese demand and any progress in a U.S./China trade deal should continue to support the market while a large new crop would pressure the market longer term.

Cotton Jul ’19 Daily Chart

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