Cotton was higher Thursday, pushed by improved weekly sales and exports, and news that China is willing to do reciprocal tariffs actions. We published those sales and exports information in our earlier comments, so we will not detail them here. However, we would take note that China was a net buyer of 25,000 bales in the report. For the most part, China has been absent from the U.S. market, other than a couple of recent purchases, one in August and the other in September.
The friendlier news of the day revolved around China’s suggestion that both sides lift various tariffs in terms of total money. It seems that each time in the past when the market has a China-positive trade story, it reacts to the upside. Of course, no trade deal with China has been formalized. In fact, no new location or venue has been determined. Rumors have it the U.S. and China may meet in London or Iowa.
As a quick reminder, Friday December cotton’s options will expire. Those wishing to exercise whatever puts and calls have until 5 p.m. to declare. Also Friday, USDA will issue its latest supply-demand data. Whatever that news turns out to be, it will likely dominate the trading psychology until Thanksgiving, particularly if domestic carryout is at a 12-year high.
The speculators remain ardently bearish. They increased their net short position last week and most likely have added to that bearish stance. However, the expiration of December puts and calls may offset some of their holdings as it affects the open interest.
For Thursday, December cotton settled at 64.35 cents, up 0.66 cent, March went out at 66.04 cents, up 0.77 cent and December 2020 closed at 68.32 cents, up 0.75 cent. Estimated volume was a whopping 73,925 contracts, eclipsing the previous single-highest volume session of June 19 with 73,734 contracts. The highest volume day was February 11, with volume surpassing 82,000 plus contracts.