Keith Brown DTN Contributing Cotton Analyst    

The cotton market traded to limit-up levels Tuesday morning, and held, before eventually easing off. The market was influenced by better-than-expected CPI numbers, which initially sent the U.S. dollar crashing, while zooming the Dow Jones some 800-intraday-points higher. Of course, with the Federal Reserve meeting Tuesday and announcing its interest rate policy Wednesday, many traders took in profits, which in turn pushed cotton off its highs.    

The U.S. dollar cascaded lower Tuesday amid improving CPI data. That number gave traders pause to think that the Federal Reserve will slow the pace of its rate increases. The greenback fell to a six-month low against the Euro after the report was released.    

Crude oil was higher Tuesday due to certain supply disruptions and a sharp decline for the U.S. dollar. Recently, a rupture of a major Canadian/U.S. pipeline caused traders to buy energies across the board. In addition, reports that OPEC pumped less oil in November buoyed prices. To that end, Saudi Arabia's November production fell the most among its members, some 404,000 barrels per day (bpd), to 10.474 million bpd. It was the Saudis lowest monthly average since May 2022.    

Pakistan's current cotton harvest is showing a continuing decline in numbers, as heavy rains and floods in its main cotton-producing areas detrimentally affected production. Total amounts for the first four months of the current marketing year 2022-23 (August-July) were down by 40%-plus compared to the same period in the last season.    

For Tuesday, March 2023 finished at 81.63 cents, up 2.24 cents, and July 2023 settled at 81.57 cents, 2.10 cents higher; estimated volume was 33,101 contracts.    

Keith Brown can be reached at commodityconsults@gmail.com 

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