By Keith Brown DTN Cotton Correspondent
With the Iranian situation seemingly diffused, the cotton market was able to turn its attention back to several impending reports and the U.S.-China trade deal. Thursday morning, USDA will issue its weekly sales and exports information; on Friday the agency will publish its latest supply-demand data. Export sales are not expected to be robust since this report will reflect the week of New Years.
Nonetheless, sales are exceeding USDA’S projection for the 2019/2020 season. For Friday’s crop report, industry estimates suggest a 500,000-bale cut to 2019 production, which ought to further reduce domestic ending stocks.
Cotton production Down Under is expected to be reduced due to the massive fires that have engulfed the country. Sadly, we just saw yesterday where the Australian authorities have arrested some 24 people, charging them with arson. At any rate, we remember from when the 1970’s California’s smog was so great that it inhibited cotton developed in the San Joaquin Valley.
The haze from the smog acted as a barrier to the sunlight effecting photosynthesis. We suspect the smoke from Australia’s fires can have a similar effect on her cotton, not to mention the amount of precious water used to douse the flames.
Next week, the U.S. and China will meet to sign the Phase One treaty. Interestingly, the Commerce Department just reported the U.S. trade gap shrank to its lowest level in three years. This narrowing came about following November’s 15% decline in America’s annual trade deficit with China. The U.S. trade gap closed by 8.2% to reflect the lowest monthly deficit since October 2016.
For Wednesday, March cotton settled at 69.96 cents, up 13, July ended at 72.04 cents, up 20, and December finished at 71.54 cents, off 3 points. Today’s estimated volume was 36,756 contracts.