A confluence of factors helped the white fiber sail higher all week as speculators caught onto both better demand and lower supplies.
Forward progress on a U.S.-China trade deal is boosting hopes that China, the world’s biggest consumer of cotton, will return to buying U.S. exports. Over 80% of all U.S. cotton is sold to foreign countries, and China was often one of America’s top customers.
A tumble in the value of the U.S. dollar this week added fuel to the cotton rally, as a weak dollar makes our cotton cheaper for foreign buyers.
In the meantime, the cotton crop in Texas, the United States’ largest cotton producer, is threatened by ongoing drought conditions. This year’s cotton crop was planted late due to wet spring conditions, which were then followed up by a hot, dry summer that stressed much of the crop across the South.
Despite the tough weather, this year’s cotton crop could be the largest in over a decade. Farmers increased cotton acreage significantly this year, choosing to plant cotton instead of soybeans or corn due to field conditions and better profitability for cotton this year.
As of midday Friday, cotton for delivery in December was worth 65 cents per pound, near the highest price in over three months.