Cotton futures surged overnight before quickly erasing losses ahead of the morning session. December cotton rose as high as 64.78 cents a pound overnight, the highest in over a week. 

Prices were likely led higher by speculators covering short positions amid the uncertainty between the U.S. and China. White House officials have been trying to lower the temperature on the recent escalation between the two countries. 

So far, President Trump and President Xi are set to meet in South Korea at the APEC meeting. A large focus has been on soybeans. However, China has been largely absent from global cotton trade, which the U.S. has relied on. 

Chinese customs data on Monday showed that China’s cotton imports continued to run near a 20-year low. Volumes have been going back and forth between being the lowest since 2016 and data going back to 2004. 

The lack of U.S. export data continues to be a concern, though there was a lack of interest from international buyers before the data was suspended. Cotton spreads increased significantly over the past week, suggesting that there could be some more commercial activity. The market has been waiting for a catalyst to lift it out of its rut. 

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