DTN Cotton Close: Lower on Profit-Taking

©Debra L Ferguson Stock Images

The cotton market was lower Friday as end-of-the-week profit-taking was the main feature of the day. Thursday saw an early strong bullish surge as USDA issued friendly sales and exports data. That rally caused the market to trade up-and-out of a long-standing bearish down channel, which encouraged short-sold speculators to buy in some of their positions. Thursday’s volume was already at 45,000 plus contracts. Yet, Friday was all about holding on and holding up.

A week from Friday, USDA will issue its long-awaited planting intentions for 2019. Talk is that acres will be huge as there are not many alternative crops across the South. Nonetheless, Mother Nature may see to it what we say we will plant may not be what we eventually harvest. In addition, we understand some key cotton areas of China are becoming dry. Remember, cotton production is as much a Northern Hemispheric game as it is a domestic one.

Basis Thursday’s sales and exports data, as of March 15, cumulative cotton sales are running about 89% of USDA’s original target for 2018-19 season. This also compares to the five-year average of 90.5% for sales this time of year. Thus, if a trade deal were to get done with China, there remains enough time for sales to surge higher into late season.

For the week, May cotton is up 1.08 cents. For the day, May cotton settled at 76.58 cents, down 0.60 cent, July finished at 77.57 cents, down 0.46 cent and December closed at 75.30 cents, down 0.03 cent. Friday’s estimated volume was 35,000 contracts.

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