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DTN Closing Cotton 07/02 13:34
Cotton Ends Week Higher
The cotton market continued to build its bullish case Thursday with a higher
weekly close. Initially, the market shot higher Tuesday, when USDA issued
less-than-expected 2020 acres data.
Keith Brown
DTN Contributing Cotton Analyst
The cotton market continued to build its bullish case Thursday with a higher
weekly close. Initially, the market shot higher Tuesday, when USDA issued
less-than-expected 2020 acres data. The average estimate was 13.17 million
acres (ma), but the government actual number was 12.20 ma. Afterwards, the
market padded its gains on Texas weather. Currently, Texas is suffering from
intense drought conditions, to the point a large part of the crop is very
poor/poor. The next crop condition numbers are expected to show a worsening
situation.
Thursday the market saw very good new-crop sales with China single-handedly
the buyer of the reported amount. An underlying fear for traders is China is
buying U.S. cotton to mitigate U.S. attention on China's Hong Kong involvement,
as well as a hedge until her own new crop improves. It is worth noting 2019-20
cumulative sales have reached 121% of USDA's original forecast making them the
highest since 2008.
The market will be closed Friday for the July 4th holiday, but will resume
normal trading Sunday night. For next week, Spot July cotton will expire on the
ninth, and USDA will issue its latest monthly supply-demand data on Friday,
July 10.
For Thursday, December cotton closed at 62.95 cents, plus 0.19 cent, March
ended at 63.67 cents, up 0.22 cent, and December 2021 finished at 61.97 cents,
up 0.27 cent. Thursday's estimated volume was 27,461 contracts.
Keith Brown can be reached at commodityconsults@gmail.com or by calling
(229) 890-7780.
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