The cotton market traded sharply higher Thursday after an encouraging early morning tweet from President Trump suggesting a trade deal with China was close at hand. Of course, one can say “we’ve heard that message before”, but the difference now is there is a tariff deadline looming this Sunday. Thus, negotiators are working to come up with some sort of sign-able agreement to beat the wire. However, it may not happen.
Also supporting cotton Thursday was USDA’s weekly sales and exports report. Both sales and shipments were markedly higher than last week’s numbers. To that end, cumulative sales for the current year are running at 69% of USDA’s forecast as compared to the five-year average of 62%.
Managed money speculators remain net short the market, but not as huge as their bearish position of last summer. Then, they were record net short some 49,000 contracts. Thursday it is estimated they are roughly net short between 4,000 to 7,000 contracts. Thus, it would not take much upside momentum to flatten them, perhaps even causing them to reverse course and become new long. New data regarding their position will supposedly be published Friday by the CFTC, post close.
For Thursday, March cotton closed at 67.17 cents, up 1.29 cents, July finished at 68.67 cents, up 0.92 cent and December finished at 68.52 cents, up 0.65 cent. Thursday’s estimated volume was 47,130 contracts.