Keith Brown DTN Contributing Cotton Analyst    

The cotton market finished its Monday session at limit up, as its steep oversold condition brought in short-covering and bargain-hunting traders. Nonetheless, the overall trend of the market remains down. In addition, the 2022 harvest is probably about one-fourth complete, so there may be more hedge selling to transpire. Another negative for cotton is the U.S. dollar's bullish recovery and the Federal Reserve's commitment of having a 2% inflation rate. This week the government will issue its PPI and CPI data, which will loom large in the Fed's decision-making process.    

For Wednesday's WASDE, expectations are calling for an average production of 13.34 million bales, compared to the 13.83 million in the September report. U.S. exports are expected to be lower, around 12.48 million, off from the 12.60 million reported in September. Domestic carryout is anticipated to be at 2.46 million bales 2.70 million in September. World ending stocks are looking to be around 84.64 million bales versus 84.75 million from last month.    

Energy prices were lower Monday as investors weighed the economic storm clouds that could foreshadow a global recession and erosion of fuel demand against potentially tight supply. Oil prices also struggled under a strong U.S. dollar, which posted its fourth higher session. A Federal Reserve indicated on Friday that there was a strong consensus for the central bank to eventually have rates at 4.5% by March 2023.    

For Monday, December closed at 88.23 cents, up 4.00 cents, March 2023 finished at 80.66 cents, up 4.00 cents and July 2023 settled at 83.92 cents, 3.98 cents higher; estimated volume was 29,794 contracts.    

Keith Brown can be reached at commodityconsults@gmail.com 

(c) Copyright 2022 DTN, LLC. All rights reserved.