Keith Brown DTN Contributing Cotton Analyst    

After being pummeled Monday, Tuesday's cotton trade essentially recovered much of Monday's loss. The driving force was a weaker U.S. dollar and faith that China's reopening will be an economic success. In fact, top Chinese officials have predicted that the economy will return to pre-pandemic levels this year.    

The U.S. dollar was lower Tuesday as the Employment Cost Index, the broadest measure of labor costs, rose 1.0% last quarter after increasing 1.2% in the July-September period. Thus U.S. labor costs increased less than expected in the fourth quarter, and before the Federal Reserve is expected to hike rates by 25 basis points on Wednesday.    

Cotton traders are also anticipating Thursday's export sales. The last two weeks of sales have exceeded triple-digits amounts, with China as a dominant buyer. As China awakens from COVID, it is obviously hoped additional sales of U.S. cotton will occur.    

Tuesday, March 2023 finished at 86.22 cents, up 1.12 cents, July settled at 87.46 cents, up 1.27 cents and December 2023 ended at 85.47 cents, 1.11 cents higher; estimated volume was 42,327 contracts.    

Keith Brown can be reached at commodityconsults@gmail.com 

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