December cotton started the week by placing a new low before trading up to end the day slightly positive, but the start of Tuesday’s trading session resumed last week’s trend lower. The cotton market is being pressured by good planting progress and expectations of ideal weather conditions adding to a possible surplus ending stocks number. No progress on a U.S./China trade agreement has decreased Chinese demand on new crop too little to none. Historically, China is one of the biggest end users of U.S. cotton and without that demand a large ending stocks number is eminent. Current estimates have ending stocks increasing to 6.59 million bales. News that the U.S. and Mexico avoided a 5% tariff is somewhat positive but don’t outweigh other bearish factors. Without less than ideal weather conditions or an increase in demand there is still downside in new crop cotton. Look for the trend lower to continue with rallies being sold until we see a change in fundamentals with 63.25 as the next target to the downside. Resistance comes in at 67.65 and 68.60.

Cotton Dec ’19 Daily Chart