By Keith Brown DTN Cotton Correspondent
The cotton market finished materially higher Thursday as it somewhat shadowed the record rising Dow Jones, as well as anticipated positive supply-demand information in Friday’s report.
With the threat of war with Iran seemingly averted, the Dow Jones and related financial markets smoked to new all-time highs. To that end, the Dow nearly hurdled the 29,000 mark.
However, cotton has three potentially impactful reports coming out Friday. Initially, will be weekly sales and exports data and the monthly jobs data. Then at high noon, USDA will issue its latest supply and demand report. Industry expectations are calling cuts to the 2019 production to the tune of some 500,000 to 700,000 bales.
Such a reduction should lower domestic carryout closer to 5.0 million bales. Additionally on Friday’s report, USDA may increase its export target into the spring.
Thursday, spot March has its highest settlement price since May 10, 2019, which was 70.37 cents. Moreover, the nearby cotton contract stands some 1,310 points up its August 2019 low of 57.65 cents.
With the potential for a U.S.-China trade deal, along with possibility of fewer 2020 acres, the cotton market may have more upside potential into the spring of 2020. To that end, a popular cotton industry magazine recently published a survey from its subscribers suggesting 12% reduction in year-over-year planted acres.
Later this month the National Cotton Council (NCC) will release its membership poll reflecting the 2020 season. Of course, the “real survey,” will be USDA’s Planting Intentions on March 30.
It seems with the new year only a few days old, the market is setting up to experience a tremendous amount of price volatility as the 2019-20 season unfolds.
For Thursday, March cotton settled at 70.69 cents, up 0.73 cent, July finished at 72.83 cents, up 0.79 cent and December ended at 72.11 cents, up 0.57 cent. Thursday’s estimated volume was a dramatic 41,985 contracts traded. It was, in fact, the highest volume level since Dec. 13, 2019.