By Keith Brown DTN Cotton Correspondent
January 13, 2020
The market finished somewhat higher Monday, punching out eight-months highs. Of course, the focus of the trade is now laser focused on the U.S.-China signing treaty this Wednesday in Washington. Supposedly, the Chinese delegation has departed Beijing for the event. With that expectation, the market is experiencing two-sided emotions.
One is bullish as a phase one treaty would offer a certain amount of economic stability, while the other, a more negative slant suggests China has taken the market down the aisle before with zero results. Whatever, in about 72 hours the market will “known something”.
The market was perplexed over Friday’s supply-demand numbers. Traders were expecting a substantial reduction in the 2019 crop, but that expectation did not materialize. Instead, the government dramatically whack harvest acres some 800,000, while also increasing the national yield per acre to compensate. Thus, the 2019 crop came down only 100,000 bales.
The U.S. will remove China’s status currency manipulator prior to the signing of the phase one Deal. During his campaign, then candidate Trump regularly trolled the Chinese as purposefully devaluing their currency in order to gain an advantage for her goods in international trade. Now, as a reward for signing phase one, and to soon open the phase two talks, the U.S. will remove that negative designation.
For Monday, March cotton settled at 71.53 cents, up 0.22 cent, July finished at 73.63 cents, up 0.21 cent and December ended at 72.74 cents, up 0.26 cent. Estimated volume was 36,793 contracts. (Source: Agfax.com)