By Keith Brown DTN Cotton Correspondent
The cotton market overcame an early and steep plunge attributable to the Wuhan virus to close slightly higher Monday. Initially, the market fell nearly 2 cents, as the weekend news reported a global outbreak. Overnight, the global stock markets were sharply lower and their emotional decline shook cotton and other agricultural related markets.
By the close Monday, spot March finished higher, with May, July and December in close tow, albeit still slightly bearish on the day. Monday’s volume was 56,000 plus contracts. It nearly eclipsed the huge volume of 59,000-plus, which occurred on Jan. 22, the day of the post phase-one turnaround.
Clearly, the driver for cotton this week will be psychology. That is, if the global financial markets can calm, their response should help to stabilize the commodities markets as well. However, that is still a tall task.
We understand the Chinese stock market will not reopen until Friday, the last day of the Lunar New Year’s celebrations. Additionally, the Hong Kong markets have a strict “up-tick rule” that might impede short selling.
This Thursday, USDA will issue its latest round of exports-sales. Of late, sales have been strong, with last week’s reports topping 300,000 plus bales sold. Any cotton bought on Tuesday’s massive decline will not show up in that report. Lastly, this Friday may bring in some end-of-the-month squaring type trading.
For Monday, March cotton closed at 69.51 cents, up 0.11 cent, July finished at 70.68 cents, down 0.44 cent and December ended at 70.10 cents, down 0.44 cent. Volume was 56,611.