Keith Brown DTN Contributing Cotton Analyst    

The cotton market somewhat held its own Thursday, despite a meltdown in the Dow Jones and a huge uptick in the U.S. dollar. Essentially, investors fear the Federal Reserve will continue to strengthen interest rates over the next six to 12 months.    

Thursday's retail sales data showed a decline of 0.6% from October to November, after a sharp 1.3% rise the previous month. The capacity of the American consumer to continue spending in a period of high inflation may be beginning to wear. The weakness in sales reflect higher borrowing costs and slow jobs growth are collectively catching up to the consumer.    

Friday, the CFTC will issue its weekly commitment of traders report. Last week, the managed-money funds in cotton were net long 18,257 contracts. Of course, the data is gathered as of Tuesday's settlement, so there is a lag-and-effect situation.    

Crude oil prices fell about 2% Thursday, as traders worried about the fuel demand outlook. Again, a stronger dollar and higher interest rates are the main bearing drivers. Besides the increase in rates by the Fed, both the Bank of England and the ECB raised their respective rates.    

Reports out of China indicate that November was a very weak economic month. Both factory output and retail sales saw their worst readings in six months. China continues to be hobbled by surging COVID-19 cases and widespread virus curbs.    

For Thursday, March 2023 finished at 81.03 cents, down 0.34 cent and July 2023 settled at 81.25 cents, 0.12 cent lower; estimated volume was 24,753 contracts.    

Keith Brown can be reached at commodityconsults@gmail.com 

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