By Keith Brown DTN Cotton Contributing Analyst
The cotton market finished triple-digits higher Thursday as short-covering and bullish bottom pickers rule the day. It has been obvious some time since the market was in a steeply oversold condition and we have been expecting some sort of corrective rally back to 75.50 cents.
Additionally, we have also been noticing a slight elevation in total open interest as the market traded higher. Such a technical situation — one of rising prices and rising open interest — potentially signals new buyers are coming in on the long side.
An early tiny heads-up that the market was looking bullish Thursday was the fact that spot March’s price of Wednesday night and low were identical. At any rate, lacking bullish news concerning the U.S./China trade war, but knowing the Chinese are coming to Washington next week has inspired traders to “get right” with the trend.
There remains a growing fear that India’s crop is smaller in size than many first thought. If that is true, along with a potential reduction in the U.S. 2018 crop, then world stock may be feeling the pressure. To that end, we are hearing China has been buying more Brazilian cotton, a possible testament to the crop troubles befalling India.
March cotton settled at 74.37 cents, up 1.10 cents, July cotton was 76.79 cents, up 1.08 cents, December 75.00 cents, up 0.76 cent. Thursday’s estimated was 23,200 contracts.
