Keith Brown DTN Contributing Cotton Analyst
Cotton nearly traded limit-down again Wednesday, even under new expanded limits. The market continues to be caught up in the massive, across-the-board downdraft of global equity and commodities markets. In fact, December cotton traded below the 90-cent mark, a level not seen since the month of December 2021.
While the cotton market is indeed oversold and crop conditions deteriorated slightly via USDA's data of Tuesday, the market still faces very negative demand constraints. To that end, supposedly there are to be new rounds of COVID-19 testing in Shanghai. This action has increased fears of further lockdowns for China, which would have a ripple effect on fiber demand.
Thursday's weekly export-sales have been delayed until Friday, due to the observance of Independence Day. Last week saw old crop sales at 48,000 bales, and new crop sales at 46,000 bales, with exports off 2% weekly at 364,000 bales.
Weather-wise, the near-term outlook is improving across major parts of the cotton belt. Currently, West Texas, the Delta and the Southeast are forecasted to see normal to above-normal precipitation. The eight- to 14-day outlook indicates moderating temperatures for much of the Cotton Belt, with the exception of Texas, which is slated to see above-normal temperatures.
For Wednesday, July cotton settled at 94.69 cents, down 4.99 cents, December closed at 88.61 cents, down 4.87 cents and March 2023 finished at 84.68 cents, 4.69 cents lower; estimated volume was 51,640 contracts.
Keith Brown can be reached at firstname.lastname@example.org
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