In a tedious push-and-pull session, December cotton finished some 150 points higher on the potential losses from Hurricane Michael. The market started off in an unconvincingly trade, but when Michael was elevated to hurricane status, December cotton really began to strengthen. Then, late in the day, the market firmed at the 7700 level. Volume increased all day, ending with an estimated 35,300 contracts trade.
Michael is expected to make landfall Wednesday night or Thursday morning as a category 3 hurricane and rumble right up through the heart of the Georgia cotton belt. If the worst fears are realized, then losses could conservatively range from 500,000 to 750,000 bales.
In other news, the U.S. Dollar climbed higher as the Federal Reserve continues to send signals of raising interest rates into next summer. This belief also tapped the Dow Jones lower. Both events are peripherally bearish to cotton.
Texas appears to be receiving some unwanted rain. Currently a front is producing widespread rains from southern West Texas, up into Oklahoma and beyond. Of course, Texas has entered its harvest as well, so this may be a small offset to Michael. Yet, until we know the amount of damage about to be wrought by either event, it’s hard to guess the overall impact to the 2018 crop.
December cotton settled 7755 up 145, March was 7849, up 135, and Red December finished at 7632, up 57 points.