By Keith Brown, DTN Cotton Correspondent 

The cotton market saw pressure Friday, not only from a wobbly Dow Jones, but from producer liquidation/rolling. Unfortunately, the cotton market has now fallen deep enough to cause cash merchants to issue “margins calls” to certain price-later contracts.

That is, some producers took an initial advance of 40% on their crop and then placed the balance upon an on-call basis. However, to reiterate, the decline of the market has eaten into the merchant’s reserve and thus more money is needed to maintain their position.

Alleviation comes when the farmer liquidates the on-call position. Other producers are rolling their May contract into July. Thus, traders sold off the May and simultaneously bought July.

Thursday’s early limit-down move was attributable to the closure of the port in Houston. Currently, there is rumored talk that the state of Georgia may shut down and with its shutting perhaps the port of Savannah. Such would be another negative nail in cotton’s coffin. Incredibly, the real damage to the U.S. economy may come after the virus passes.

USDA planting intentions will be issued Tuesday week, March 31. No matter the numbers reported, given the price destruction in the new crop futures, what will anyone believe?

Thus far, May cotton will finish 6.82 cents down on the week and nearly 8.12 cents down on the month and 16.87 cents down on the year.

For Friday, May cotton closed at 53.68 cents, down 1.25 cents, July ended at 53.74 cents, down 1.24 cents and December settled at 55.03 cents, down 1.07 cents. Estimated volume was 52,208 contracts.