By Keith Brown DTN Cotton Correspondent 

Cotton finished slightly higher Wednesday as the market padded its small gains of Tuesday. Technically, the market is building value at higher levels. Perceptions of improving global demand and perhaps an impending “fix” to the trade war has been encouraging traders to cover short-sold positions, and others to establish new long positions. Thus, to date, the highest settlement for December cotton came last Friday at 65.16 cents, with a previous spike high of 65.85 cents from Monday two weeks ago.

After a couple of rain events, the South is getting back into harvest mode. There have been comments from ginners across the Delta and Southeast that yields may be coming in slightly stronger than first anticipated. As of last weekend, the 2019 crop was 40% gathered.

Of course, USDA will update its latest crop findings in its November 8 monthly supply-demand report, or in about three weeks. Despite early season weather adversities, the government has continued to project a huge crop on its books. In fact, during October USDA tabulators put the 2019 crop about 21.650 million bales.

In viewing cotton’s intra-seasonal spreads, December cotton is trading at a 1.88-cent discount to the July 2020 contract. The negativity suggests December will bear the brunt of this year’s massive crop. However, an immediate upturn in the spread might suggest the 2019 crop is indeed less than USDA’s forecast.

Looking farther out, December 2019 is trading at a 2.00-cent discount to the “Red December,” or 2020 contract. The thought here is the lower nearby December trades, the higher next year December may run, as global producers will be discouraged from increasing plantings.

Wednesday December cotton settled at 64.95 cents, up 0.28 cent, March closed at 65.79 cents, up 0.37 cent and December 2020 ended at 66.99 cents, up 0.27 cent. Estimated volume was 24,729 contracts.