DTN Closing Cotton 08/07 13:46
Cotton Crashes on China, Seasonals
The cotton market finished its Friday session sharply lower.
DTN Contributing Cotton Analyst
The cotton market finished its Friday session sharply lower. Fears of
Chinese economic retaliation over the Trump administration's banning of TikTok
and WeChat caused traders to make the leap to anticipating cancellations of
U.S. cotton purchases. To that end, trade representatives from the U.S. and
China will meet via video conferencing next week to "review" the phase-one
trade deal. Whether that means expanding it, canceling it, or holding steady to
the agreement, we can't say.
Another negative that pushed cotton lower Friday was the market's seasonal
tendency to post an August top. Looking back over recent seasons, the cotton
market made seasonal peaks in August 2013, 2015, 2016 and maybe this year.
Friday's big volume of 40,440-plus contracts may be further evidence of an
August 2020 high.
However, next week, there will be new data for the market to embrace. On
Monday will be the USDA Crop Progress report, Wednesday will bring monthly
supply-demand data, Thursday we'll see weekly exports sales issues, then on
Friday, will be the U.S.-China meeting on the phase-one deal. Thus, there is a
ton of potential data to either save the market or put it out of its misery.
For the week, December cotton closed down 30 points, after being up over 200
points on Thursday. For the month, it was off those 30 same points, but for the
year, it finished off some 800 points.
For Friday, December cotton closed at 62.36 cents, down 2.49 cents, March
ended at 63.19 cents, off 2.30 cents, and December 2021 finished at 62.70
cents, down 1.61 cents.
Keith Brown can be reached at firstname.lastname@example.org or by calling
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