By Keith Brown DTN Cotton Correspondent
The cotton market finished moderate lower Monday as fears about over the Wuhan virus will not abate. That is, depending on one’s internet source, either the virus will soon be contained or quite the opposite, that it is just getting started. Thus, the increased volatility across the world’s financial and commodity markets is causing huge trading swings, as well as discouraging global investors from any new buying.
For cotton, its technical trend is being threatened as common trend-following indicators, such as moving averages, are just beginning to tip bearish. With open interest so high, and certain managed money speculators openly net long, the stage is seemingly being set for another bearish downdraft if no “good news” is soon heard on the virus.
Additionally, spot March will face its option expiration this Friday. To that end, and cynically speaking, it would be hard to think the market would now run back higher providing financial salvation for the many call holders at this late date.
Currently, the psyche of the market seems to be so poor, that even another blockbuster exports-sales report may not move the market’s bullish needle that much. Last week the trade saw marketing-year-high-sales, with China as the top buyer, but the ICE futures never moved a bullish muscle.
Lastly, this Friday the Labor Department will issue its monthly jobs report. Generally speaking, the U.S. economy has been adding jobs, but the bearish ripple effect of the Wuhan virus has not made its full impact on U.S. jobs. Recently, a rising number of U.S. businesses with global ties, have shifted or temporarily suspended operations that could leave their customers and workers exposed to the virus.
To that end, American Airlines and Delta have suspended flights to China, while other major companies have imposed employee travel bans to and from China. Last week, several analysts and economists from top U.S. banks have indicated the coronavirus could stifle China’s GDP growth for 2020, as well as impairs the US economy as well.
For Monday, March cotton settled at 66.84 cents, down 0.66 cent, July ended at 68.22 cents, down 0.97 cent and December finished at 67.71 cents, down 1.02 cents. Estimated volume was 66,078 contracts.
