By Keith Brown DTN Cotton Contributing Analyst
After two days of blistering declines, December cotton finished higher Thursday. One reason for the positive close was that the market was oversold on a very short-term basis, but the more meaningful reason was a recovering Dow Jones. As subscribers know, Wednesday the Dow collapsed some 600 points, sucking all of the bullish oxygen out the room. however, better earnings, plus Friday’s bullishly anticipated Q3 GDP data encouraged short-covering and new buyers.
To that end, cotton was able to slough off poor weekly and sales and exports numbers from USDA Thursday morning. Although sales were a tad higher than last week, China again cancelled previous purchase. This makes the fourth consecutive week of such reductions.
It’s interesting to see how much stronger spot December was to its sister contracts. We think this strength might reflect a growing quality situation with in the crop. After all, this 2018 crop has been hit with a major drought, two huge hurricanes, and more recently in West Texas, an episode of rain, ice and snow. We would think that by now, not only is the quantity of cotton under assault, but its quality as well.
Volume Thursday was another big number, coming in at 39,200 estimated contracts traded. December cotton will enter Friday’s trade down a mere 20 cent for the week.
December Cotton closed Thursday at 77.68 cents, up 61 cent, March was 78.96 cents, up 9 cent, and red December finished 77.07 cents, up 7 cent.