Keith Brown DTN Contributing Cotton Analyst
The cotton market was sharply higher to limit-up amid a recovering Dow and trend technicals. The Dow has been gutted over 2000 points from one week ago Wednesday, and only just now is trying to come up for air. Its higher trade is offering cotton some peripheral support. During that melt, cotton's technical trend essentially held together and that alone has encouraged new buying. However, the market is also having to get the May and July contracts somewhat squared up. If May expires at a premium to July, that would be a friendly fundamental, if it ends discount to July, that would be considered at least a momentary negative twist.
Thursday morning, USDA will issue its weekly export-sales data. Weekly sales have registered three consecutive marketing-year low sales. With the Chinese economy reeling from her harsh COVID-19 restrictions, traders remain hopeful weekly sales can somehow break the series of low-end sales.
There were no delivery notices tendered against the spot May contract today. In fact, since it entered delivery there have been none. May cotton expires on May 6.
Weather-wise the one- to five-day forecast calls for scant chances of rain for West Texas, but the six- to 10-day is showing normal to above normal chance of rain. Unfortunately, the eight- to 14-day is out of agreement and shows normal to below-normal opportunities.
Wednesday, May cotton settled at 146.08 cents, up 3.55 cents, July closed at 140.68 cents, up 5.00 cents and December finished at 122.39 cents, 3.68 cents higher; estimated volume was 30,589 contracts.
Keith Brown can be reached at commodityconsults@gmail.com
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