By Keith Brown DTN Cotton Contributing Analyst
March cotton was sharply higher Wednesday, encouraged by short-covering ahead of the Thanksgiving Break and improving outside markets. To the latter, both the Dow Jones and Crude Oil posted triple-digits gains. Yet cotton also saw traders prepare for spot December’s impending delivery this Monday. So, with Friday an abbreviated trading session, many market participants elected to square up their positions today.
Technically, the market remains in a steep downtrend, and to that end, December cotton did violate its October 1 low on Tuesdday. However, in an interesting twist, the March, May and July contracts did not follow suit. Seasonally, Thanksgiving week is the prime time for producers to see a final harvest low, as there have been several consecutive years where the seasonal low came during November, with two falling right at Thanksgiving Day. Thus, for spot December to spill to new lows is simply ordinary market behavior.
Besides a shorten session on Friday, USDA will report its weekly sales and exports data at 8:30 Friday morning. Of late, those reports have been less than stellar to the bullish cause of cotton. China has been a mainstay canceler of U.S. cotton for several consecutive weeks. However, next weekend, November 30, the U.S. and China will meet to try to hammer their trade differences. A partial or full resolution of the trade war would directly benefit cotton, among many other markets.
December cotton settled Wednesday at 76.51 cents, up 1.24 cents, March closed at 78.78 cents, up 1.35 cents, and December 2019 cotton was 77.08 cents, up 0.45 cent. Wednesday’s estimated volume was 44,500 contracts traded.
