By Keith Brown, DTN Contributing Cotton Analyst
Cotton closed sharply higher Wednesday as the chart or technical situation for the market improves. A long-standing tried-and-true indicator in most traders’ toolbox are moving averages. To that end, a majority of those bands are currently turning up.
Their “look” tends to tell short-sold speculators their bearish position may be in jeopardy. Thus, those shorts will cover, sending prices higher. Of course, there are the peripheral cheerleaders, such as the Dow Jones and a weakening U.S. dollar, which collectively encourage cotton higher.
Thursday, the market will see weekly export sales, and those need to be positive numbers. Last week was a positive 15,000-bale report for the old crop season.
The Federal Reserve painted a dour picture of current economic conditions and pledged at its Wednesday meeting to continue its historically aggressive policy stance until it is comfortable that the U.S. economy is back on its feet.
Following this week’s Federal Open Market Committee meeting, the central bank said it would maintain its current interest rate target between 0% and 0.25%.
There are some chances for additional rains this weekend across the Southeast. Already, fieldwork has essentially stopped due to the storms of last week. USDA will published another crop progress number this Monday.
July cotton closed at 57.12, up 1.34 cents, December finished at 58.68 cents, up 0.96 cent and March ended at 59.33, up 0.86 cent. Estimate volume was 20,943 contracts.