The cotton market reversed course Thursday to close higher. Apparently, there exists an element of disbelief to USDA’s bearish numbers of Wednesday. Traders wondered how could fewer planted acres, suffering from drought conditions, come out on the other side with higher yields.
In addition, there was strong buying in the grain markets, based on weather concerns and Chinese buying. Thus, a portion of cotton’s rally was in sympathy with that situation. Thirdly, the U.S. dollar was lower Thursday, as there is more talk about extra fiscal stimulus to shore up the U.S. economy.
Thursday’s export sales did show a huge rollover of unshipped purchased from the old crop into the new. There were fears of massive cancelations, but for now that cotton is positioned to be exported sometime in the new season — that is, at least, the hope.
Traders are now looking towards the impending conference between the U.S. and China on the phase-one trade deal. The official wording was that the two sides want “to review” the deal. There may be some adjustments made, but, as of now, neither side is professing ending the deal.
For Thursday, December closed at 62.99 cents, up 0.79 cent, March closed out at 63.92 cents, up 0.78 cent and December 2021 settled at 63.86 cents, up 0.58 cent. Estimated volume was 22,804.