Cotton Ends Week on Sour Note
The cotton market ended its Friday session with a negligible loss, as traders squared positions ahead of the weekend. Typical of some trading Funds is to exit profitable positions to improve their trading books to promote sources of new money, before reentering the market in a new month. Sept. 1 is this Tuesday. In the first week of the new month, the market will see new data on the 2020 crop’s condition as well as fresh exports and sales before observing the Labor Day Holiday Monday week.
Traders are watching two tropical disturbances coming off the coast of Africa. Although they are far off, the peak of hurricane season comes in late September. Thus, in 10 or so days, their appearance may be more meaningful. Damages inflicted to the crop by Hurricane Laura are still being counted. There are some large cotton farms around the Lake Charles, Louisiana area, but it’s unlikely any definitive numbers will make it on Monday’s crop condition report.
The U.S. dollar saw further declines Friday as the index is still smarting for the Federal Reserve action of “reinventing” its inflation target. The Fed has abandoned its fixed 2% target in lieu of a “floating” or “averaging” inflation rate. The bottom line is continued lower interest rates, and further weakness in the U.S. dollar.
For Friday, December cotton closed at 65.08 cents, minus 0.29 cent, March finished at 65.93 cents, off 0.29 cent, and Red December settled at 65.21 cents, minus 0.29 cent. However, for the week, December cotton was up 80 cents.