Keith Brown DTN Contributing Cotton Analyst
The cotton market saw a split trade Tuesday as spot July was lower, while December cotton ended slightly higher. Spot July is gearing up for export sales, supply-demand data and its options expiration on Friday. December is geared more towards Texas weather and the U.S. dollar.
Regarding weather news, U.S. conditions will be well balanced during the next two weeks, bringing periods of rain and sunshine to many key Midwestern and Northern Plains crop areas. A similar pattern will hold true for the central Plains, lower Midwest and Delta, but West Texas looks to be dry and hotter than normal. Argentina's outlook remains mostly dry during much of the coming 10 days, but some rain will fall across Mato Grosso do Sul Wednesday into Friday bringing a bit of relief to cotton. India's monsoon is performing a little weaker than normal, however, there is plenty of time for correction.
Crude oil prices were essentially stable Tuesday, as that market tries to balance risk sentiment with supply concerns versus the demand from Asia. The U.S. State Department authorized two Venezuelan energy shippers to commence exporting oil to Europe to replace lost Russian production. In addition, with Shanghai returning to normal over the next few weeks, energy demand is likely to increase.
Target, a major U.S. apparel retailer, announced its plans to work off excess inventory. It also lowered its financial guidance for the quarter. Major retailers have delivered mixed results and outlooks in recent weeks, resulting in higher stock market volatility as investors try to determine whether a recession is at hand or not. This Friday a new CPI (consumer inflation) report will be issued by the Commerce Department.
For Tuesday, July cotton settled at 136.95 cents, down 0.79 cent, December closed at 119.88 cents, up 0.08 cent and March 2023 finished at 115.33 cents, 0.22 cent higher; estimated volume was 45,357 contracts.
Keith Brown can be reached at commodityconsults@gmail.com
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