The cotton market finished its Friday session sharply lower. Fears of Chinese economic retaliation over the Trump administration’s banning of TikTok and WeChat caused traders to make the leap to anticipating cancellations of U.S. cotton purchases. To that end, trade representatives from the U.S. and China will meet via video conferencing next week to “review” the phase-one trade deal. Whether that means expanding it, canceling it, or holding steady to the agreement, we can’t say.
Another negative that pushed cotton lower Friday was the market’s seasonal tendency to post an August top. Looking back over recent seasons, the cotton market made seasonal peaks in August 2013, 2015, 2016 and maybe this year. Friday’s big volume of 40,440-plus contracts may be further evidence of an August 2020 high.
However, next week, there will be new data for the market to embrace. On Monday will be the USDA Crop Progress report, Wednesday will bring monthly supply-demand data, Thursday we’ll see weekly exports sales issues, then on Friday, will be the U.S.-China meeting on the phase-one deal. Thus, there is a ton of potential data to either save the market or put it out of its misery.
For the week, December cotton closed down 30 points, after being up over 200 points on Thursday. For the month, it was off those 30 same points, but for the year, it finished off some 800 points.
For Friday, December cotton closed at 62.36 cents, down 2.49 cents, March ended at 63.19 cents, off 2.30 cents, and December 2021 finished at 62.70 cents, down 1.61 cents.