Keith Brown DTN Contributing Cotton Analyst
The market was very strong Tuesday as the West Texas cotton crop continues to rapidly deteriorate under adverse weather conditions. The current near-term and extended weather outlooks indicate hotter and drier conditions than normal. Also abetting higher cotton prices were the strong Chicago grains, as they too have threatening weather situations.
Wednesday afternoon, the Federal Reserve will announce its interest rate policy. Although any uptick in rates is dollar-positive to some degree certain hikes are baked in, so to speak. Thus, a quarter-point move would be seen as negative to the dollar, a three-quarter point jump is neutral, while a full point move would be bullish to the dollar.
This Thursday, USDA will issue its weekly export sales. Last week saw China in seventh place in the line of buyers. Also Thursday, second-quarter GDP will be published. First quarter GDP was a negative 1.60%, thus if Thursday's number is also negative, that would constitute a textbook definition of a recession.
Weather-wise, the one- to five-day forecast calls for scattered rains for the Texas Panhandle but virtually none for West Texas. In fact, the six- to 10-day forecast calls for above-normal temperature and below-normal precipitation in that region. However, the Delta and the Southeast appear to be on schedule for more rains.
For Tuesday, December closed at 94.48 cents, up 3.42 cents, March 2023 finished at 90.74 cents, up 3.38 cents and July 2023 settled at 87.26 cents, 3.30 cents; estimated volume was 23,103 contracts.
Keith Brown can be reached at email@example.com
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