By Keith Brown, DTN Contributing Cotton Analyst
Cotton was lower Monday as traders prepare for spot December’s delivery, which commences Tuesday. Coming into Monday’s trading, December’s open interest was roughly 5,900 contracts. Any delivery notices posted will be found on the ICE website. In addition, the U.S. Dollar Index made new highs for its run.
Monday afternoon at 4 p.m. EST, USDA will update harvest. As of last week, some 65% of the 2021 crop had been gathered. To that end, although there have been some delaying rains, generally speaking harvest conditions have been good. The latest 6- to 10-day forecast indicates below-normal rainfall for the Southeast, the Delta and Texas. Temperatures are projected to be above normal for Texas and the Delta, but near normal for the Southeast.
The U.S. Dollar Index was higher Monday in somewhat of a response to the reappointment of Jerome Powell as Federal Reserve chairman for a second four-year term. Powell is considered to be a tad “hawkish” on inflation and may pull the interest rate trigger sooner rather than later.
There is talk the White House may soon announce plans to tap into the U.S. Strategic Petroleum Reserve as a means of curbing high fuel costs. To that end, President Joe Biden has asked other countries, including Japan and China, to follow suit.
However, some energy analysts are arguing the validity of the move. That is, the U.S. has intervened in oil markets three times in the past. The first time was in 1991 during the Gulf War; next in 2005, a month after Hurricane Katrina; and lastly in 2011, as an offset to disruption to oil supplies of the Libyan civil war. Afterwards the energy markets still moved higher.
Monday, December settled at 117.71, down 1.51 cents; March ended at 115.97, minus .46 cent and December 2022 ended at 91.99, .13 cent higher. Monday’s estimated volume was 18,889 contracts.
Source: Agfax