By Keith Brown, DTN Contributing Cotton Analyst
The cotton market ended Thursday’s session on a very convincing positive note. Not only did the market trade up, the July 9 high was finally hurdled, and the market posted its highest settlement since it’s April COVID-19 low. That July high had stood as key resistance against the market’s continuing trend, and was, if fact, an obvious target for technical traders to pursue. Still, it took the December futures virtually a month to come back full swing and establish a new high above the 65-cent level.
Of course, behind the technical move was the fundamental driver of hot and dry conditions, which even now grips the cotton belt. This past Monday, in its weekly condition report, USDA indicated six of the top seven producing states had shown deterioration. Yet, very little relief from adverse weather has occurred. Thus, traders are anticipating the 2020 crop to reflect even worse numbers come this Monday.
In our Thursday morning comments we made mention of a possible pink bollworm outbreak in India. Since that time, we have talked to our Indian contact, who has indeed confirmed the news. Currently, the infestation is occurring in the province of Maharashtra, which is a major producing state; a similar episode happened during the 2017-18 season and that infestations resulted in a dramatic loss of production.
Friday, traders will be focused upon the extended weather outlooks for the cotton belt and the monthly unemployment data. The jobs report is out at 8:30 a.m. ET. Expectations indicate about 158,000 new non-farm jobs were created during Calendar July. This compares to the June Report of 480,000 jobs created.
As the December Market ends its first full week of trading, it will start its Friday session up 2.19 cents on the week and ditto on the month. The better number is December cotton is now down only 5.51 cents on the year. At one time it was down some 15.00 cents.
For Thursday, December cotton closed at 64.85 cents, up 0.39 cent, March finished at 65.49 cents, up 0.36 cent and December 2021 settled at 64.31 cents, up 0.49 cent. Estimated volume was 30,456 contracts.