By Keith Brown, DTN Contributing Cotton Analyst 

The cotton market finished sharply higher Tuesday in contrast to its action Monday. On Monday, the market was trading with triple-digit gains, but succumbed to speculative liquidation and closed slightly lower. However, Tuesday, again the market jumped higher, but this time was able to hold onto its triple-digit gains. Traders are eyeing Friday’s monthly supply-demand report. Expectations are calling for an increase in exports, which opens the door for a possible decline in old crop carryout. That would be friendly for May/July cotton, while new crop December is thought to be undervalued.

A quick summary of U.S. weather for the next two weeks has the Delta a little wetter than desired for cotton, corn and early soybean planting. The southeastern states will experience a good mix of weather over the next two weeks supporting early planted crop development and future planting as well. Lastly, the U.S. west-central and Southwestern Plains are drying down and this process will continue for the next 10 days. Such activity will slowly raise crop moisture stress in unirrigated areas.

The Federal Reserve is meeting Tuesday and Wednesday to discuss monetary policy. It is expected that rates will remain unchanged. However, some private analysts are beginning to forecast an inevitable uptick in interest rates as the U.S. economy continues to rapidly recover from COVID-19.

Tuesday, May cotton closed at 79.22 cents. up 1.34 cents, July settled at 80.47 cents, up 1.29 cents and December ended at 79.41 cents, up 1.54 cents; estimated volume was 50,640 contracts.