By Keith Brown DTN Cotton Correspondent
The cotton market continued to break Thursday despite evidence of improving exports-sales data. Thursday morning USDA reported some 400,000-plus bales were sold between the two crop years, with a dose of heavy shipments. China was a net buyer in both seasons. However, immediately after export-sales were published, the focus and anxiety of traders switch to Friday’s planting. With the idea 2019 cotton acres will be massive, the market sharply declined.
Also helping to bang cotton lower was the strength of the U.S. dollar. News of a weaker Europe economy sent the euro reeling, which in turn rallied the dollar. Despite the Fed’s assurance that it would not raise rates in the foreseeable future, the desire of the global investor to want dollar-denominated assets continue to under-gird the buck. Unfortunately, a strong dollar acts like a surrogate tariff, as it causes U.S. cotton to cost more to foreign customers.
Friday at high Noon, USDA will release its acres intentions for 2019. Guesses range from 14.1 million acres (ma) to 15.45 ma, with an average guess of 14.95 ma. Large acre swings either way will impact the price of the market. However, given there is a long-standing bearish expectations of this report, less acres may result a bigger bullish punch.
Thursday, May cotton settled at 75.87 cents, down 1.08 cents, July finished at 76.88 cents, down 1.04 cents and December cotton closed at 74.84 cents, down 0.66 cent. Estimated volume for Thursday’s session was 31,400 contracts traded.
