After two strong bullish days, the cotton market finished lower Friday as traders took profits ahead of the long Martin Luther King Day holiday. On Wednesday, the market saw encouragement from the news story suggesting the U.S. was willing to curtail or eliminate all sanctions, provided the Chinese would offer deep economic concessions.
However, that story was walked back by other U.S. officials that same day. Then on Friday, China indicated its willingness to level the imbalance of trade with the U.S. by offering to buy one trillion dollars of U.S. goods over the next five years. That also was seen a bullish development.
Still at their core, these offers were most likely “trial balloons” sent up to see what the other guy might be thinking.
For the week, spot cotton was up 1.35 cents and stands 3.10 cents above the January low 70.65 cents. Next week a delegation of top level Chinese negotiators arrive in Washington to renew trade talks.
Regarding the other bearish issue for cotton — the government shutdown — neither political side seems willing to reach a compromise. Next week will commence week number five of the longest shut down in history. However, cotton has been fairly resilient in the face of having no USDA news to channel it along.
March cotton settled 73.89 cents, down 0.48 cent, July finished at 76.59 cents, off 0.20 cent and December was 74.77 cents, down 0.23 cent. Friday’s estimated volume was 23,200 contracts.