Keith Brown DTN Contributing Cotton Analyst
The cotton market was sharply lower Friday, as follow-through selling from Thursday's decline took center stage. To that end, Friday profit taking and speculative selling ruled the day. Fundamentally, traders are concerned that the COVID-19 lockdowns in China could disrupt the global economy. In addition, the U.S. dollar experienced a very strong week given the Fed's hiking of interest rates. The implication of having such a strong Greenback typically translates into weaker agricultural exports.
Friday afternoon, the CFTC will update the status of certain traders. The highly watched managed-money funds have been leaking out of their net long positions for several weeks. At their peak, back in February, the funds were roughly 94,000 contracts net long compared to last week's position of 69,000 contracts.
Spot May cotton expired Friday at 146.87 cents. That is a 3.00 cent premium to the next-in-line July contract.
Looking ahead, on Monday USDA will issue its weekly crop progress data, followed by Thursday's weekly export sales on May 12. However, also on the May 12, USDA will publish new supply-demand numbers in its May crop report. The basis of this report is the government will take a stab at global production and yield.
For Friday, May cotton settled at 146.87 cents, down 5.15 cents, July closed at 143.61 cents, down 5.15 cents and December finished at 123.74 cents, 2.70 cents lower; estimated volume was 31,192 contracts.
Keith Brown can be reached at email@example.com
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