By Keith Brown, DTN Contributing Cotton Analyst 

With a narrow range and slow volume, the cotton market started the fourth quarter of 2020 virtually unchanged. Of course, the next 90 days represents the historical window of harvest, and to that end, USDA will update the gathering progress this Monday afternoon. Currently, many southern cotton producers are initially gathering their peanut crops before moving on to their cotton. As weather permits, farmers will apply defoliants to their cotton fields. To some degree, the cotton market is locked in a tug of war, which has the trend-following speculators in long, while merchants are selling rallies in anticipation of eventual harvest pressures.

The U.S. dollar was lower Thursday on continuing talks coming out of the Congress for another COVID stimulus package. Currently, the Democrats are wanting a 2.2 trillion-dollar package while the Republicans are wanting something “way south” of that number. Of course, the implication of such “out of the thin air” spending is a dilution of the dollar’s buying power.

The cotton market continues to host a well-defined up-channel pattern, which originated from the Spring COVID-19 low of 50.18 cents basis December and has risen to its present position. Such bullish price flow has the main encouragement for speculators to buy and maintain a net long position. As it stands, they are heavily long, with the last CFTC reading at 51,000 contracts. Such a situation can be a double-edged sword as an upside breakout would draw in more buyers, while any sort of disappointment could spook them to exit.

Friday morning at 8:30 a.m., the Labor Department will issue its jobs report. Analysts’ current estimates stand at 850k non-farm jobs versus last month’s 1.37 million jobs.

For Thursday, December cotton closed at 65.91 cents, up 0.12 cent, March ended at 66.70 cents, up 0.16 cent and December 2021 finished at 66.08 cents, up 0.24 cent. Estimated volume was 19,642 contracts.