By Keith Brown DTN Cotton Contributing Analyst
December cotton finished a tad higher Wednesday, as rains across the Southeast are hampering harvesting efforts. Wednesday’s range was about 1.00 cents, on estimated volume of 47,500 contracts. The session seemed slow and two-sided, as all eyes were on the crude oil and the Dow Jones.
Tuesday, crude suffered one of the worst trading sessions in years, dropping some $5 per barrel. The Dow was off Wednesday as hangover for Apple’s lower projections lingeredm as well as weakness in the banking sector.
Of course, the link to cotton with such market is traders have a better risk-on attitude when such outside markets are flourishing. Otherwise, speculators become easily discouraged to add new long positions.
The next potential motivator for cotton will be the U.S./China trade talks at the G-20 meeting later this month. Obviously, it is hoped some mitigation will result, but the Chinese may play hard ball since the conservatives lost the U.S. House to the Democrats.
The Chinese see this erosion of power as political weakness and may not be so quick for a deal. However, China still has economic troubles beyond cotton. In fact, there is the possibility it may devalue its yuan to spur exports of her goods to the world.
Normally on Thursday, USDA would issue its weekly sales and exports report, but that data will be delayed until Friday due to the Veterans Day holiday.
Of late, sales and shipments have putrid. Unfortunately, they will remain so until sometime as a Chinese deal is reached or a big correction befalls the U.S. dollar. As of now, given the attitude of the Chinese and the Federal Reserve, either one of prospects events seem improbable.
December cotton closed Wednesday at 76.39 cents, up 0.53 cent, March was 78.35 cents, up 0.69 cent and December 2019 finished at 77.50 cents, up 0.36 cent.
