By Keith Brown DTN Cotton Contributing Analyst
December cotton closed with triple-digit gains Thursday after President Trump tweeted of a Thursday morning phone call he had with China’s President Xi over the trade war. Mr. Trump characterized the conversation as “long and very productive.” The two leaders are scheduled to meet on November 30 at the G-20 meeting in Buenos Aries.
Prior to that tweet, cotton was struggling amid very poor weekly sales and exports data. That report revealed China had cancelled enough of her sales to overwhelm the buying of other countries, giving the report a net negative number of -40,000 bales. At any rate, that bearish information was quickly swept away with the Trump news.
In addition to the Trump tweet, news of an imminent Brexit financial services deal sent the U.S. dollar sharply lower. This too was positive for cotton. Estimated volume was 65,000 plus contracts, which is the largest volume day since June 16. Speculators short-covered positions, while bullish bottom-pickers emerged to initiate long side trades.
Harvest is the time of year cotton often posts a seasonal low. With that price history in mind, if other positive news comes out of the midterm elections, the supply-demand report, and the Trump/Xi meeting, it ought to play out bullish in the cotton market.
Friday, the Labor Department will report its monthly jobs report. Expectations for the non-farm payrolls number is up 188,000. A strong report suggests a strong economy, and would open the door for additional rate hikes by the Federal Reserve. Of course, a strong dollar is an impediment to future cotton export sales.
December cotton settled at 79.03 cents, up 2.17 cents, March was 80.48 cents, up 2.18 cents and red December was 78.32 cents, up 1.46 cents.
