Keith Brown DTN Contributing Cotton Analyst
The cotton market was sharply higher Friday on continuing fears of reduced 2022 production. In addition to the drought-ravaged Southwest, the U.S. Delta and the Southeast are now beginning to experience undesired weather conditions. Thus, speculators and commercials are adding new positions before the market gets the notion to make a run at contract highs.
In his concluding talk at the Federal Reserve's Jackson Hole retreat, Chairman Jerome Powell reiterated the central bank's pledge to "use our tools forcefully" to revert inflation from its 40-year high level. On that news, the Dow Jones fell 650 points, while the U.S. dollar traded positive.
Friday afternoon the CFTC will issue its weekly Commitment of Traders report. Last week, the managed-money funds had bought some 11,000 contracts, increasing their net long position to 40,000 plus. It will be interesting to see if cotton's ability to consolidate its gains this week will "bait" more longs into the market.
On Monday, USDA will issue its crop condition tabulations. Last week saw about 50% of the Texas crop rated very poor to poor. At issue will be the bolls-open category. Through Friday's session, December cotton is up 1.67 cents on the week, plus 20.94 cents points higher on the month and stands 25.03 cents up on the year.
For Friday, December closed at 117.68 cents, up 3.57 cents, March 2023 finished at 114.37 cents, up 3.54 cents and July 2023 settled at 106.00 cents, 2.89 cents higher; estimated volume was 18,944 contracts.
Keith Brown can be reached at commodityconsults@gmail.com
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