DTN Cotton Close: Lower on Delivery Angst

Cotton harvest. ©Debra L Ferguson

The cotton market continued its lower path Tuesday as producers wrestle with the situation of whether to fix or roll basis contracts by Thursday. Monday’s market saw a steep decline on decent volume (41,000 contracts), as hedgers began to shift positions.

Often on Tuesdays, the market tends to counter its action of Monday, but not this Tuesday, as this week culminates in a special situation. Thus, long liquidation ahead of FND is weakening the overall market.

The U.S.-China trade talks remain in stalemate status. The Chinese and U.S. negotiators are diametrically opposed to the possible solution. Some analysts believe the Chinese are deliberately stalling the talks to possibly see the outcome of the impeachment hearings. However, on December 15 additional U.S. tariffs are set to be implemented. That action could either trigger the Chinese to come to terms or drive then away into next year.

Besides Thursday’s delivery deadline, weekly sales and exports will also be reported. Last week saw a marketing-year-high with China a participate with an 83,000 bale purchase. With that in mind, if another such Chinese buy were to surface again this week, the demand psychologically of the market may began to turn more positive.

For Tuesday, spot December closed at 63.44 cents, down 0.77 cent, March settled at 65.35 cents, down 0.62 cent and December 2020 ended at 67.95 cents, down 0.31 cent. Tuesday’s estimated volume was 39,091 contracts.

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