Keith Brown DTN Contributing Cotton Analyst    

The cotton market ended Wednesday's session materially higher, although at one time it was on the verge of heading for limit up. Initially, for many markets, especially cotton, Wednesday morning there seemed to be a positive mood swing that China would indeed overcome its COVID situation.  To that end, speaking at the Davos Economic Summit, China's Vice-premier, Liu He, indicated that China was making plans for a staggering economic comeback once peak-COVID was achieved.        

This week's export sales from USDA are delayed until Friday due to the observance of MLK this past Monday. Last week's sales were about 85,000 positive bales, with China participating as a small buyer.    

Thursday morning, the Commerce Department released its PPI data, as well as monthly Retails Sales for December. Basically, the producer price index declined 0.5% for the month, compared to the estimate for a 0.1% decrease. A sharp drop in energy prices helped bring the inflation pace down for the month. Unfortunately, Retail Sales fell 1.1% in December, slightly more than the 1% forecast. Apparel sales were slow during Christmas.    

The Federal Open Market Committee (FOMC) will meet Jan. 31 and Feb. 1 to decide on interest rates. Most traders have dialed in a 0.25 percentage point interest rate increase that would take the benchmark borrowing rate to a targeted range of 4.5%-4.75%. However, other investors say the central bank could easily hike rates one-half percent, or 50 basis points.    

Wednesday, March 2023 finished at 84.81 cents, up 1.99 cents, July settled at 85.40 cents, up 2.10 cents and December 2023 ended at 83.20 cents, 1.69 cents higher; estimated volume was 45,939 contracts.    

Keith Brown can be reached at commodityconsults@gmail.com 

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