Despite stout weekly sales and exports numbers, as well as government confirmation of fewer acres, the cotton market still could not post a positive settlement Friday. Earlier in the day, USDA reported combined seasonal sales of 376,000 bales, along with total shipments of 375,700 contracts. Although, China was a vacant buyer, it was shipped about 40,000 in the exports category.
Additionally, from the USDA Agricultural Forum Friday in Virginia, 2020 cotton acres were projected to be about 12.50 million. That number was 300,000 acres below the recent NCC survey of 12.80 million. Nonetheless, the market is “infected” with coronavirus, and has so far refused to trade higher.
Monday is FND for the March Cotton. That delivery period will run till March 9, the final day of March Cotton’s expiration.
The U.S. dollar seemingly took a decisive lower turn Friday. It had been on a sustained rally for nearly 2.50 basis cents since its posted Dec. 31 low. To that end, the (Chinese) Yuan has been running a 7-to-1 relationship versus the U.S. dollar, which, generally speaking, is not a good sign for U.S. commodities.
The fundamental question is how does the U.S. increase exports in a dollar-strong environment? Of course, beyond the issue of a strong dollar is the adverse affect the coronavirus is not only having on U.S.-Chinese trade, but global trade in general.
For Friday, March cotton closed at 68.93 cents, up 0.18 cent; May ended at 69.00 cents down 0.37 cent; July finished at 69.84 cents, down 0.40 cent and December ended at 69.65 cents, down 0.39 cent. For the week, March cotton was up 1.52 cents. Friday’s estimated volume was 29,094 contracts.