By Keith Brown, DTN Contributing Cotton Analyst 

The cotton market settled sharply higher Tuesday in the wake of reduced 2020 acres. USDA reported upland acres at 12.0 million and all cotton acres at 12.20 million. Tuesday’s estimate was 11% down year over year, and obviously well below the average industry guess of 13.27 million. However, fears of COVID-19 disruptions, large carry outs and political troubles with China somewhat tempered the trade’s reaction.

The next big report will be Thursday’s weekly export sales. Although current sales have been running superior to USDA’s projections, the market needs to see big numbers if only for psychological support.

The U.S. dollar continues to be steady. In March of this year, the dollar posted an all-time high, but then COVID struck. Since that time, it has seen a steep decline. Yet, of late, the contract has become something of a positive proxy trade against COVID-19, but it has also suffered at the hands of the Federal Reserve’s monetary policy of near-zero interest rates. Of course, a cheaper dollar would greatly enhance U.S. agricultural exports, if only the world’s economy could reenergize.

December cotton ended at 60.88 cents, up 1.25 cents, March finished at 61.54 cents, up 1.25 cents and December 2021 settled at 60.28 cents, up 0.83 cents. Estimated volume was 23,032 contracts.