By Keith Brown, DTN Contributing Cotton Analyst
The market finished slightly lower Monday, despite the fact the Dow Jones overcame its 600-point deficit to stand virtually unchanged at the time of cotton’s close. Nonetheless, cotton was still weighed down by its overbought condition. Of late, its ability to easily post higher highs encouraged more speculative buying, stretching its charts to technical extremes.
To that end, Friday’s Commitments of Traders report showed managed-money traders were net buyers of 11,221 contracts of cotton for the week ending Dec. 15. Their action increased their net-long position to 69,997 contracts. The high side of their buying came in October at 70,201 contracts. The all-time high for speculators was 109,000 from January 2018. Within five months of that historic level, the Trump administration leveled its historic tariffs on China.
The U.S. dollar was higher Monday as a part of a flight-to-quality move. The buck had been beaten down all last week based on the success of the COVID-19 vaccine situation. However, now with this latest “British twist” of a variant strand, traders came in to not only cover shorts, but to buy for quality.
The market has obviously entered the Christmas holiday timeframe. With that, the market will close early on Thursday and then all-day Friday. We will only write only one early morning comment on Thursday but return to our normal publishing schedule of two daily reports the following Monday.
Monday, March cotton closed at 74.76 cents, down 2.40 cents, July settled at 76.17 cents, down 2.21 cents and December ended at 72.36 cents, down 1.54 cents. Estimated volume was 38,237 contracts.