Those better days can start this Monday with a G-20 agreement with China, even if it is nothing more than the two sides committing to come together in a series of future meetings to work out their trade differences. In fact, it may take months of negotiations to repair the trading relationship to even close to its former self.

Nonetheless, technically the market has set itself up for a possibly rally into next year. One cause for that thinking is cotton’s seasonal tendency. More often than not, prices tend to bottom during fall harvest and then rise into the following spring. To that end, there are several agricultural markets, such as corn and beans, which, like cotton, have been basing for many weeks. In other words, cotton has been trading a very tight, two-sided congestive pattern since September.

Such “nowhere trading” is building an obvious base, or platform, on the charts. It is from this sideways formation that prices could launch higher. Naturally, the fuel for such an ignition might come from a resolution in the trade war, or another severe reduction in the crop’s supply, or some new weather adversity, or fewer new-crop acres. So the ancient wisdom which says “hope springs eternal” is always true.

Friday is the end of the month, which might yet bring in some position squaring. To that end, the market’s open interest has fallen to its lowest reading in a year. With that move, speculators have grossly dwindled their positions. Yet, they may already be thinking about the market possibilities for next season. We will too!

December cotton closed Thursday at 7664, down 112; March was 7868, off 20; and December 2019 was 7681, down 24. Thursday’s estimated volume was 14,800 contracts traded.