By Keith Brown DTN Cotton Correspondent
After an early week downturn on poor supply-demand numbers, the market bounced back on decent weekly sales and exports data. However, overnight news that China was going to expand its import quotas to feed its domestic textile mills allowed the market really zoomed. The National Development and Reform Committee, an arm of the Chinese government overseeing economic growth and development, made the announcement that it would allow up 800,000 metric tons of imported cotton.
We think that number equates to 3.5 million U.S. bales. However, there are multiple hoops Chinese mills must jump in order to qualify, so nothing is a done deal. Nonetheless, the news does say something about Chinese demand, which apparently is “hungry.”
This new demand twist might suggest that future sales and exports, particularly shipments, may be strong in the coming weeks. This news comes at a time when most analysts believe a U.S./China trade deal is imminent, plus the 2019 crop is starting off with fewer intended acres. To that end, on Monday USDA will release its latest planting progress numbers. Although no obvious weather delays, one can never rule out Mother Nature from affecting, positively or negatively, the outcome of spring planting.
Regarding global production for 2019, several USDA foreign attaches in certain countries are upping their outputs look for those nations. India expect to see a year-over-year increase of 7%, Brazil too is looking to produce some 12.5 million bales, or a 5% jump. Pakistan’s crop is expected to increase some 6.7%. However, as the American humorist Will Rogers quipped “a-sayin’ and a-doin’ are two different horses.”
Friday, May cotton settled at 78.11 cents, up 1.13 cents, July finished at 78.86 cents, up 1.12 cents and December closed at 77.19 cents, up 0.60 cent. For the week spot May was down about 0.14 cent. Today’s estimated volume was 65,835 contracts.