Keith Brown DTN Contributing Cotton Analyst
The cotton market was sharply lower Friday as traders fear an unfolding recession, as well as rain for West Texas. To the latter, rain may not be beneficial for some portions of the Texas crop at this stage of its development. Additionally, a big unknown is how the Chinese economy will fare after its COVID-19 lockdowns are lifted, if they ever are. With that, the Dow Jones posted new lows for its run, and has entered the "bear market" designation, given it has dropped some 20% from its all-time high.
The Nationally Crop Monitor, released Friday morning, showed that much of Texas is still suffering extreme to exceptional drought. Temperatures have been inordinately high, further drying soils and stressing crops. However, the Lubbock area has an improved chance for rain from Sunday night into Wednesday morning. The Southeast is anticipating much needed weekend rains as well.
Chinese authorities are set to reopen Shanghai from its COVID-19 lockdown. Soon residents will be allowed to go out to shop for groceries for the first time in nearly two months. In addition, the port of Shanghai, the largest container port in the world, will reopen in stages.
Friday afternoon, the CFTC will update its various trader categories. At last count, the closely watched managed-money funds had sold some 1900 long positions, lowering their bullish net position to 70,700 contracts.
For Friday, July cotton settled at 142.27 cents, down 5.43 cents, December closed at 128.18 cents, down 3.10 cents and March 2023 finished at 120.84 cents, 3.09 cents lower; estimated volume was 24,854 contracts.
Keith Brown can be reached at email@example.com
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