• Cotton prices climbed sharply, making an 18-month high, despite a decline in the overall commodity complex and bearish outside market data.
• Bullish technical signals increased buying, helping boost prices.
• March futures settled at 94.63 cents per pound, up 553 points for the week.
• May futures settled at 95.31 cents per pound, up 563 points for the week.
• Total open interest decreased 3,563 contracts from the previous week, totaling 261,881 contracts.
• USDA set a baseline of 11 million acres to be planted in cotton, and production to rebound at 16 million bales.
• Prices have moved in cotton’s favor since Cotton Grower magazine estimated 10.2 million acres in January.

U.S. inflation increased unexpectedly, dialing back expectations of a cut to interest rates anytime soon.

• Before the hot inflation news, the S&P 500 set a record, closing above 5000 for the first time in history.
• The U.S. Consumer Price Index increased by 0.3% in January and 3.1% annually, much higher than the market expected.
• January is typically an erratic month for inflation readings, but this was a solid signal that the Fed will continue its “higher for longer” path.
• The stock market tumbled on hotter-than-expected consumer prices but managed to recover some of the losses by the end of the week.
• Shopping slowed down in the U.S. in January, evident by the 0.8% decline in U.S. retail sales and 0.2% decrease in clothing sales.
• U.S. initial unemployment claims fell, showing continued resiliency in the U.S. labor market.

U.S. export sales were lower for the week ending February 8^th, but still above the pace needed to reach the 12.3 million bale estimate from USDA.

• A net total of 160,500 Upland bales were sold for the week, lower than recent reports but still above what needs to be sold to reach the current export expectation.
• A total of 276,100 Upland bales were exported, below average for what we typically see at this time of the year.
• A net total of 5,300 Pima bales were sold and 5,500 bales were shipped for the week.

The Week Ahead

• Merchants will be focused on winding down the last bit of their March futures next week, given First Notice Day for March Futures is Friday, February 23.
• Buyers in East Asia should return to the market next week after taking a week-long break for the New Year festivals.
• The National Cotton Council’s Annual Meeting takes place this weekend. They will release their Economic Outlook and Planting Intentions for the 2024/25 crop on Sunday, February 18.