Keith Brown DTN Contributing Cotton Analyst    

The cotton market settled higher Wednesday on an inflation-inspired CPI report and a continuance of hot and dry West Texas weather. Wednesday morning the Bureau of Labor Statistics issued its monthly Consumer Prices Index (CPI), and its data showed inflation remains tenacious in the U.S. Economy. Expectations were for a smaller jump for April, implying that the inflation trend had peaked, but that was not the case.    

Weather-wise, the one- to five-day forecast still suggests light rain for West Texas, but the Six- to 10-day and eight- to 14-day outlooks indicate below-normal chances with increasing temperatures. Additionally, a condition of global dryness seems to be building, with India, Pakistan, and Europe seeing increasingly hot and dry conditions.    

Thursday, USDA will issue its weekly export-sales report, as well as a supply-demand update for May. The WASDE will include a first full outlook for the upcoming 2022-23 season, as well as an assessment of Ukraine exports and production in drought-affected regions such as Brazil and the European Union. Specific to the report, the average trade expectation for U.S. 2022-23 cotton production is 16.89 million bales, versus last year's 17.62 million bales. Domestic ending stocks are expected to come in at 3.57 million bales, compared to 3.50 million bales seen in 2021-22. World ending stocks are anticipated to be 83.74 million bales versus 83.38 million bales in 2021-22.    

There are growing concerns over Chinese cotton demand, given her COVID-induced lockdowns. To that end, it has shuttered a great many cities, and may be doing long-lasting damage to her infrastructure and economy. China is one of the biggest consumers of U.S. Cotton.    

For Wednesday, July cotton settled at 143.60 cents, up 0.66 cent, December closed at 124.75 cents, up 0.58 cent and March 2023 finished at 119.59 cents, 0.68 cent higher; estimated volume was 25,014 contracts.    

Keith Brown can be reached at commodityconsults@gmail.com 

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