By Keith Brown DTN Cotton Correspondent
The cotton market was sharply lower Thursday as the Trump Administration announced it would up the tariffs on all Chinese goods to the 25% level. Immediately, China indicated it is prepared to take retaliatory measures as well. The Dow Jones proceeded to fall well over 500 points in its Thursday morning session.
However, the Chinese are in town and seemingly wanting to talk trade. In fact, President Trump is having dinner with them Thursday night. Traders and markets are hoping for an eleventh hours agreement. Still all major agricultural markets were markedly lower Thursday.
Friday, USDA will release its most current supply-demand data for the month of May. The market will see its first glimpse of the 2019-20 crop. Analysts see U.S. production at 21.77 million bales, up from this season’s 18.40 million. Exports are expected to be at 16.50 million bales, up for this year. Domestic ending stocks are expected at 6.35 million, with world ending stocks slightly lower, from 76.36 million bales to 76.33 million.
Of course, the potential bigger news Friday may be whether the U.S. and China can iron out their differences and come to a consensus on trade. The hang-up, as we understand it, was last week the U.S. negotiators wanted a list of what specific laws that China was going to implement to have enforcement of the agreement. China refused, and thus here we are.
Thursday, July Cotton settled at 70.23 cents, down 2.08 cents, December closed at 70.57 cents, off 1.85 cents and March finished at 71.44 cents, down 1.79 cents. Thursday’s estimated volume was 54,000 contracts.
