By Keith Brown, DTN Cotton Correspondent
The cotton market finished sharply higher Monday on super-strong volume.
Monday’s rally was the result of a huge oversold-covering by speculators who realized they had sold the cotton market into bearish oblivion. Additionally, a massive rally in the Dow Jones initiated bargain-buying across many commodities markets, including cattle, crude and gold. The bullish news of the day was the perception — and we emphasis the word perception — that infections from the coronavirus were slightly receding in the New York City area.
Chart-wise, cotton had posted a January peak right at 74 cents as it dialed in the phase-one trade deal with China, but then suddenly, the emergence of the coronavirus sent prices cascading into a nearly 30-cent bear market. The market’s massive decline has not seemingly affected the potential for new crop acres. Just last week, USDA reported intentions slightly below acres for 2019.
However, it is thought the June Acres Report will show greater reductions. Moreover, another looming negative for the cotton market may be the closings of foreign textile mills in their nation’s fight of the corona virus. Interestingly, to date, there have been few cancellations of any size.
May cotton closed at 53.05 cents, up 2.07 cents, July ended at 53.08 cents, up 2.10 cents and December finished at 54.12 cents, up 2.04 cents. Estimated volume was 66,806 contracts.
Source: Agfax