May 17, 2019
By Keith Brown DTN Cotton Correspondent
The cotton market ended in the week with a bearish Friday session. The bearish close was fitting to a week where the overall dropped some 3.00 cents and to a market that fell some 7.50 cents last week. The guilty fundamental is the continued bearish tone set by the back-and-forth action of the U.S.-China trade war.
Friday, China seemed to put off any continuance of the trade talks until, as the Chinese put it, “Washington mends its ways.” Thus, as it stands there is no scheduled meeting, or even the hint of one between U.S. and Chinese negotiators. The next possible encounter with the Chinese will likely occur with Mr. Trump and Mr. Xi meet at the G-20 Summit in Japan during June.
As we talk to Producers across the country we are learning Mother Nature is suddenly becoming very uncooperative. The U.S. Delta and part of Alabama are overly wet, while Georgia is seeing a halt to some planting efforts due to dryness. In fact, the forecast for South Georgia for the next week is hot and dry. Thus, some Producers may be forced to running pivots to prep the land. On Monday, USDA will update its planting progress data.
July options expire in less than 30 days and with them the hope of producers to potentially improve their financial situation for the old crop. To that end, we hear many producers have their 2018 cotton on-call with cash merchants. In a market environment where seemingly prices are cascading lower, that situation will end in tears. Sadly, they will learn, and for some producers re-learn, the bitter lesson of rolling forward to gain time. There is much more to marketing than simply holding and hoping.
Friday, July cotton settled 65.99 cents, down 0.81 cent, December finished 66.38 cents, off 0.71 cent and March end at 67.38 cents, done 0.77 cent. Estimated volume was 23,3476 contracts.