The cotton market ended Wednesday fractionally higher on low volume. The market does have growing concerns about the upcoming U.S.-Chinese trade talks in October. However, Tuesday at the UN, President Trump delivered very scathing and public criticism of the Chinese government. Thus oddsmakers are saying there will be no trade deal this year.
In other news, the U.S. dollar spiked higher and posted a life-of-contract close. The dollar’s rally was based on the neutrality of the Trump/Ukraine telephone transcripts. Usually, a strong dollar is considered a detriment to U.S. exports, particularity agricultural exports.
Thursday, USDA will issue its latest sales and exports data. The last few weeks have shown very slow business, with China a major canceler of U.S. cotton. Last week, China canceled 39,000 bales, and the prior week, some 24,000 bales. Conclusively, if the U.S. is not selling cotton below 60 cents, how can it possibly sell more with cotton above 60 cents.
The National Hurricane Service is showing no less than four “tropical things” out in the Atlantic. Currently, none of those events seem to be threatening the U.S. mainland.
As the calendar rushes towards the end of the month, and the end of quarter, speculators continue to weasel out of their net short positions. At their peak, speculators were net short 49,000 contracts. However, the latest government has them about half of their original positions. Thus, every time the market ducks, speculators step in and buy.
Wednesday, December cotton settled at 60.45 cents, up 0.05 cent, March ended at 61.17 cents, off 0.02 cent and December 2020 ended at 63.74 cents up 0.15 cent. Wednesday’s estimated volume was 16,326 contracts.