By Keith Brown DTN Cotton Correspondent
USDA bullishly upended the cotton market Friday with its lower-than-expected Prospective Planting report. The average industry guess was 14.50 million acres (ma), within a range of 14.1 to 15.50 ma. Friday’s number was 13.80 ma, down 2% year-over-year. To that end, Texas and Georgia, the top two producing states, were both off some 6%.
Interestingly, the old-crop market (2018-19) reacted much stronger than the new-crop (2019-20). The reason for that strength is that current export sales are brisk, and now with the potential for fewer 2019 acres, the bales of old- crop cotton that do exist could command a premium.
Most likely, the focus of the market will now shift to weather and field conditions. To that end, USDA will commence its weekly planting progress numbers the second week of April. If Mother Nature begins to misbehave, the cotton rally will extend even higher. Also in front of the market is the potential for a trade deal between the U.S. and China. Negotiators will gather again in Washington next week. If a satisfactory deal is struck, China has promised to buy a trillion dollars with of U.S. goods, and that most assuredly includes cotton.
For the week, spot cotton was up 1.03 cent, in addition to last week’s 1.08-cent rise. May cotton settled at 77.61 cents, up 1.74 cent, July was 78.31 cents, up 1.43 cent, and December was 75.44 cents, up 0.60 cent. Friday’s estimated volume was 40,500 contracts.
