By Keith Brown DTN Cotton Correspondent
Reports suggesting the Chinese virus is abating inspired the global financial markets, such as the Dow Jones, along with crude Oil and cotton to ride higher. In fact, Wednesday, spot March cotton posted a new high for the month of February. Along those lines, from its January high of 71.96 cents down to its February low of 66.75 cents, calculates a 50% retracement at 69.36 cents.
Thus, that price may become the next key technical target for the trade. Of course, first notice day (FND) for March cotton happens Friday next week, the 21st. That means all related cotton must be fixed by that date or rolled out to a deferred futures contract, so there may be added selling pressure to emerge from producers.
Thursday at 8:30 a.m., USDA will report on weekly exports-sales. This data will reflect a time in the middle of the Chinese Lunar New Year celebration. Thus, if China were to show as a strong buyer, such might suggests it does plan to honor, best it can, the phase-one agreement.
Speculators continue to stay net long in the market. A key technical indicator they keenly watch is the famed 200-day moving average. The market crossed above that average initially in mid-December, which inspired the rally to the January high.
However, during the “coronavirus bearish adjustment,” spot March did close below it on the first day of February, that is Feb. 3. However, within two days it traded back over it and is now pushing up-and-away. Such a positive move cause bullish traders to salivate.
Wednesday, March cotton settled at 68.58 cents, up 0.35 cent, July finished at 70.05 cents, up 0.51 cent and December ended at 69.82 cents, up 0.51 cent. Wednesday’s estimated volume was 63,877 contracts traded.