The cotton market ended Friday with triple-digit losses as it re-aligned itself to the falling Dow. Thursday, saw the Dow up on bearish news, but cotton lower on friendly news. It appeared a real market disconnect was occurring, but Friday’s action somewhat today killed that notion.
Next week USDA will issue its planting intentions for 2020. The average industry estimate stands at 12.50 million acres. Of course, given new crop cotton’s cheap location, one wonders how producers will react.
Spot May cotton closed down 1.45 cents for the day, 2.30 cents down on the week and 10.47 cents down on the month. With the possibility of the coronavirus intensifying, a deep global recession may be in the cards.
Already, the possibility of foreign mill shutdowns and the dismissal of workers is greatly anticipated. Additionally, there are equal fears that foreign may also become temporarily shuttered.
Next week, is also the end of the month, and the end of the quarter, so the possibility of position adjustments by speculators may increase market volatility.
Friday, May cotton settled at 51.33 cents, down 1.45 cent, July closed at 51.28 cents, down 1.55 cents and December finished at 53.49 cents, down 1.12 cents. Friday’s estimated volume was 29,511 contracts.