DTN Cotton Close: Staggers Sideways to Up

Cotton traded in a narrow range Monday on slow volume. The market is attempting to sort out its fundamental future. It might receive some clarity on that situation as early Monday afternoon, when USDA will issue its most recent crop conditions numbers. Last week’s data indicated the 2019 crop was going backwards in its late development and has tumbled off its peak 61% good-to-excellent rating.

However, the most meaningful information the market will likely receive this week will come in the form of Thursday’s monthly supply-demand report. It is anticipated USDA will indeed lower the 2019 crop, but there is also the risk of the government paring future exports as well. That action would be something of an offset, keeping carryout at high levels.

Also, on that Thursday, weekly sales and exports will be published. Currently, the market is starting its fifth or sixth consecutive week trading under the 60-cent mark. Despite the cheapness of its price, the pace of cotton sales — although up on the five-year average — still feels as if they are lagging.

One reason for that attitude is the fact the world is allegedly in an economic slowdown. Right now, negative interest rates and high sovereign debt prevail across many countries. This week the European Central Bank (ECB) may start new round of stimulus for Europe in the form of quantitative easing, that is, printing money to buy debt.

For Monday, December cotton closed at 58.98 cents, up 0.40 cent, March finished at 59.59 cents, up 0.28 cent and December 2020 ended at 62.05 cents, up 0.22 cent. Estimated volume was 16,139 contracts.

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