Keith Brown DTN Contributing Cotton Analyst    

The cotton market was sharply lower Wednesday amid fears of recession, weak demand, and higher interest rates. This morning's retail sales number was double analysts' expectations, and was deemed inflationary. Thus, the Federal Reserve may now be on tap to hike rates by 50 basis points at the March meeting. This will likely drive the U.S. dollar higher, impairing exports and contributing to less demand.    

Thursday, the Labor Department will publish its Producer Price Index. This report tracks the pace of inflation at the wholesale level in the economy. Current estimates for month-over-month are up 0.3% versus 0.1%. For year-over-year traders are anticipating a pace of 4.5% compared to 5.5%.    

Also Thursday, USDA will issue its weekly export sales report. Last week was a marketing-year-high sales number, which may be hard to beat.    

Spot March cotton enters delivery next Tuesday. Its current open interest stands at 21,686 contracts.    

Wednesday, March 2023 finished at 82.55 cents, minus 2.85, July settled at 83.60 cents, down 2.56, and December 2023, ended at 83.00 cents, 2.07 lower. Today's estimated volume was 68,885 contracts.    

Keith Brown can be reached at commodityconsults@gmail.com 

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