Keith Brown DTN Contributing Cotton Analyst
The cotton market was sharply higher Monday, even threatening its limit-up price, as concerns with the crop of India took center stage. Not necessarily "new news," but industry talk has it that her northern crop in the Punjab province is reduced some 75% due to adverse rains and pests. To that end, Indian textiles are petitioning the government to extend the duty-free import program. Whether that was officially done Monday, we can't say, but "something" drove the market higher.
In addition to the probable Indians news, the CFTC data of last Friday essentially showed speculative traders were adding shorts and closing out longs. Their action reduced their long stance by some 7,537 contracts to a net 10,720 position. Commercial cotton traders added 4.7k new longs, which reduced their net short to 36,679 contracts.
Also, China reported their November cotton imports at 180,000 metric tons, which was an 85% increase from November 2021. Yet China still lags some 12% behind last season's pace.
The U.S. dollar was slightly lower Monday, as outside currencies traded competitively. The safe-haven yen was volatile on reports that Japan will consider revising a decade-old blueprint for fighting deflation. The Greenback has been zooming higher this year based on a hawkish Federal Reserve and rising geo-political tensions. However, of late, it has come under pressure as investors believe the U.S. central bank may have limited room to keep on with its inflation-fighting interest rate hikes.
For Monday, March 2023 finished at 84.08 cents, up 2.16 cents, and July 2023 settled at 83.75 cents, 1.72 cents higher; estimated volume was 29,395 contracts.
Keith Brown can be reached at commodityconsults@gmail.com
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