The cotton market closed slightly lower Thursday on lack of market-direct news and lackluster volume. With the government shutdown now the longest in modern history, key cotton reports, such as exports and supply-demand, are being denied to traders and hedgers alike. As with any market, uncertainty usually breeds more sellers than buyers.
Still, it’s interesting to note that open interest has been on the rise lately, with slightly rising prices. The interpretation of this situation suggests new bullish longs are entering the market, no doubt in hopes of trade deal of sorts with China.
Thursday’s estimated volume was 35,600 contracts traded.
Despite the absence of any supply-demand numbers Friday, in our conversation with other traders, hedgers and merchants, we developed a crude poll of what the current U.S. situation might reflect. To that end, U.S. production would be reduced nearly 200,000 bales, taking the 2018 crop closer to 18.30 million bales. However, exports would also be pared. However, domestic ending stocks might still be lowered to 4.37 million bales from the last known number, which was December’s 4.40 million bales.
Also, we continue to hear India’s crop may be worse than December’s supply and demand data, thus pressuring global stocks lower. Even though the aforementioned numbers are all conjecture and unofficial, we thought subscribers need some sort of data guidance.
March cotton settled at 72.85 cents, down 0.28 cent, July was at 75.67 cents, up 0.01 cent and December closed at 74.11 cents, down 0.08 cent.