By Keith Brown DTN Cotton Correspondent
Cotton finished sharply higher Thursday as a decent exports-sales report from USDA and bullish technicals fueled the rise. Although Thursday’s sales and exports report was somewhat below last week’s amounts, the fact China was a standout buyer proved to be a psychological boon for traders. Its participation certainly gave credibility to the notion it may return as a steady buyer of U.S. cotton across 2020.
Additionally, Thursday’s strong close may have encouraged certain net-short speculators to liquidate their bearish positions, perhaps even going a bit net long. As subscribers know, money-managed speculators have been net short the market for virtually all of 2019. In fact, at one point during midsummer, they were record net short the equivalent of 4.50 million bales of cotton.
Chart-wise, the look of the market itself is taking on a friendly slant. That is, if a subscriber would simply hold a daily cotton chart out at arm’s length and ask “what is the trend,” the answer would be readily obvious. Given the ancient wisdom that says a picture is worth a thousand words, this current picture could draw in a thousand buyers.
Looking into 2020 some traders see the possibility of additional Chinese buying, less new crop acres across the Northern Hemisphere and the potential for a weaker dollar as bullish drivers for the market. Clearly, a combination of those fundamentals could prove quite bullish to cotton in 2020, especially if some unforeseen weather scare were to develop.
Friday is the last full week of trading, as the Christmas and New Year’s holiday will interrupt the market. To that end, weekly sales and exports will be delayed to Friday for the next two weeks.
For Friday, March cotton settled at 67.58 cents, up 0.84 cent, July ended at 69.32 cents, up 0.66 cent and December closed at 69.14 cents, up 0.42 cent. Thursday’s estimated volume was 23,775 contracts.