By Keith Brown DTN Cotton Contributing Analyst
December cotton finished lower Monday, despite an initial Sunday night upside burst. By session’s end on Monday, the daily range had expanded more than two hundred points as speculative selling intensified into the close. Still, Monday’s volume estimated of 23,000 contracts, was materially under last week’s average daily volume of 37,500 contracts traded.
The outstanding negative for Tuesday was the ever-strengthening U.S. dollar. In fact, the dollar posted its higher close since midsummer, not to mention a contract high close Monday.
A primary reason for a higher dollar is strength of the U.S. economy, which is forcing the Federal Reserve to raise interest rates. Supposedly, increasing interest rates helps to slow the economy, prevent it from overheating and generating inflationary pressures. However, another reason for dollar-strength is the weakness in Europe.
To that end, Euro-currency weakness stems from the implementation of Brexit, out-of-control mass immigration, slow economic growth and the failure of certain socialist policies in Germany and France, among others. Interestingly on Monday, Angela Merkel, Germany’s long-time chancellor, announced she would not seek another term for office.
Monday afternoon USDA will release its current crop progress numbers. It is expected the 2018 cotton harvest will have reached near the halfway mark of gathering efforts. Of course, steep production losses in the Southeast, and to some degree West Texas, will speed the 2018 harvest along.
December cotton settled 77.17 cents, down 1.36 cents, March was 78.66 cents, off 1.16 cents and red December was 76.75 cents, down 0.58 cent.