December cotton was sharply lower Tuesday amid worries over the midterms, Thursday’s supply-demand and Friday’s option expiration. Tuesday’s estimate volume was an astounding 61,000 contract traded. However, we sensed a larger portion of that volume was done on the Tuesday afternoon recovery.
Earlier in the season, prices caved well over 2.00 cents points down. However, bargain hunters and short-covering buying lifted the March contract forward to a near double-digit loss, with July closing out with only a double-digit loss.
Sometime on Tuesday there will be a consensus on the vote of the midterms. A Republican victory overall favors cotton as the Trump administration would deal with China from an element of strength at the G-20 trade talks. However, the midterms may also affect the U.S. dollar and the Dow Jones as well. A huge break in the Dow could influence cotton prices lower still.
This Thursday cotton will face the November supply-demand report and weekly sales and exports. It is expected the 2018 crop will be dramatically reduced, but physical business may be up in the air. Last week, sales were a net negative number as China was a massive canceler.
December cotton settled at 77.43 cents, down 1.44 cents, March went out at 79.27 cents, down 1.07 cents and December 2019 is at 77.84 cents, down 0.42 cent.