Keith Brown DTN Contributing Cotton Analyst
The cotton market was unable to generate any bullish enthusiasm Tuesday over China's plan to lift COVID-19 travel restrictions on Jan. 8. Instead, traders placed more emphasis on that nation's swelling infections, plus its saber-rattling against Taiwan this past weekend. To the former point, it is estimated China is incurring over 1 million new infections, along with 5,000 deaths per day. To the latter, Taiwan claimed its airspace and territorial waters were violated some 70 times by China this past week. An invasion of Taiwan would, among other possibilities, carry a bearish tilt for cotton.
Crude oil posted a three-week high Tuesday on the news China's latest easing of COVID-19 restrictions might increase energy demand. China will stop requiring inbound travelers to go into quarantine, which is a major step toward easing curbs on borders, which have been in widespread effect 2020.
The U.S. dollar was slightly lower Tuesday as currency traders were obviously torn as to how to trade the various events occurring with China. To that end, an improving Chinese economy may be seen as dollar-negative, while any deeper military actions taken against Taiwan would be seen as dollar-supportive.
For Tuesday, March 2023 finished at 84.24 cents, down 0.97 cent, and July 2023 settled at 83.91 cents, 1.00 cent lower; estimated volume was 12,504 contracts.
Keith Brown can be reached at commodityconsults@gmail.com
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