Keith Brown DTN Contributing Cotton Analyst
After a steep early morning sell-off, the cotton market was able to reverse and then returned to slightly lower levels on the day. Seeing some overnight rain in the Lubbock area did spur some traders to sell into the market. However, given it wasn't enough moisture to bend the drought, the ICE futures staged a late session rally. Still, to reiterate, prices finished lower on the session.
The next two big reports this week for the market to consider are Thursday's weekly export sales, followed by Friday's jobs report from the labor department. Traders would love to see a triple-digit sales number versus last week's sales of 77,000 bales. On the labor front, expectations are for a jobs number just shy of one million! In fact, there is talk the U.S. economy might grow 9% this year.
Also on Friday, the CFTC will issue its update on traders via its commitment of traders report. This past Friday there was an indication certain managed-money funds were increasing their net long position.
Spot May cotton remains in its delivery mode until Thursday. It will expire on the session's settlement. Its current open interest stands at two! To date, a mere 67 notices have been tendered.
The International Cotton Advisory Committee (ICAC) said in a report Monday that global production for 2020-21 is estimated at 24.6 million metric tons, led by India, while worldwide consumption is estimated at 25 million metric tons, led by China. However, U.S. restrictions on Xinjiang cotton products could put additional stress on global supply chains, the report inferred. The U.S. continues to urge its western allies to maintain pressure on China over its alleged use of forced labor in Xinjiang province.
Tuesday, July Cotton closed at 87.17 cents, down 0.69 cent, December settled at 85.06 cents, up 0.14 cent and March 2022 ended at 84.38 cents, up 0.18 cent; estimated volume was 19,744 contracts.
Keith Brown can be reached at commodityconsults@gmail.com or by calling (229) 890-7780.
