Keith Brown DTN Contributing Cotton Analyst    

The cotton market was sharply higher Wednesday amid a very hot and dry forecast for West Texas and surging energies.    

While the immediate weather outlook holds scant rain for West Texas, the six- to 10-day and the eight- to 14-day forecasts are calling below-normal precipitation and above-average temperatures. Moreover, West Texas will suffer triple-digit temperatures over the next few days.    

Oil prices rose about 2% Wednesday, posting a 13-week high, as U.S. demand for gasoline has kept rising despite record pump prices. In addition, it is thought as China reopens part of its economy from its self-inflicted COVID-19 lockdowns, demand for energy will also increase. Both Brent and WTI were on pace for their highest settlements since March 8, which were their highest since 2008.    

Thursday morning USDA will issue its weekly export-sales report. Last week saw outstanding sales of nearly 450,000 bales, and marketing-year high shipments. China was the top buyer.    On Friday, USDA will update its supply-demand numbers. Essentially, the tabulators are calling for slightly higher production and ending stocks. World ending stocks are expected somewhat higher as well.    

July's option will expire with Friday's settlement. Of course, it is expected this event will greatly reduce current open interest for the spot month. As of Wednesday, July's open interest stands at 64,100 contracts.    

For Wednesday, July cotton settled at 140.62 cents, up 3.67 cents, December closed at 122.54 cents, up 2.66 cents and March 2023 finished at 117.74 cents, 2.41 cents higher; estimated volume was 42,277 contracts.    

Keith Brown can be reached at commodityconsults@gmail.com 

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