DTN Cotton Close: Surges, Then Retreats

Defoliation of cotton with highboy ground rig. ©Debra L Ferguson

The cotton market staged a strong rally Friday on bullish anticipation of a U.S.-China trade deal and a friendly USDA supply/demand report of next Tuesday. Then, late in the session, profit-taking hit the trade and pulled the market off, but into the close prices shored up. However, it was cotton’s best day in many weeks.

The China trade situation received a “bump” of sorts as several news wires reported China was going to lift tariffs on certain amounts U.S. soybeans and pork. Naturally, that announcement increased optimism about an overall trade deal.

Also helping cotton rally was the stout jobs report. New non-farm jobs turned out to be nearly double the expectations analysts had published. Additionally, the Labor Department revised higher the previous jobs report of the last three months.

Spot December cotton expired Friday at 65.00 cents, which was seen as a decent technical close. That is, at one time December was trading discount to the March by some 2.00 cents. Now that spread narrowed to exactly 1.00 cent. Additionally, March cotton finished week-over-week some 0.64 cent higher. That too was a friendly technical move, given on Wednesday morning, it was down 2.00 cents on the week.

As a reminder this Monday will be another round of harvest data, and on Tuesday, USDA will release its latest crop data.

For Friday, March cotton settled 66.00 cents, up 1.49 cents, July closed at 67.51 cents, up 1.03 cents and December 2020 ended at 67.64 cents, up 0.53 cent. Estimated volume was 35,803 contracts.

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