Keith Brown DTN Contributing Cotton Analyst    

Amid mill fixation short-covering and speculative buying, the cotton market posted another round of life-of-contract highs Wednesday. Apparently, textile mills are running short on time to cover their previously sold obligation, thus the urgency of the old crop trade. In addition, spot May cotton expires this Friday, and how it closes could greatly influence the old crop's outcome.    

Weather-wise, West Texas remains in the grip of a generational drought. Although some forecasts do allow for some rain for West Texas over the coming two weeks, it will take substantial and prolonged rain to break her drought.    

Thursday morning, USDA will issue its weekly export-sales report. After three consecutive weeks of marketing-year low sales, current season sales greatly improved last week. Nonetheless, the COVID lockdowns in China are thought to be resurrecting certain supply-chain problems.    

The Federal Reserve increased interest rates by half a percentage point, which was in line with market expectations. In addition, the central bank outlined a program which will eventually reduce its bond holdings by $95 billion a month. The rate move is the largest since 2000 and is in response to rising inflation pressures. From the news the Dow rallied 200 points, while the U.S. dollar slightly retreated.    

Wednesday, May cotton settled at 158.02 cents, up 4.69 cents, July closed at 154.76 cents, up 4.68 cents and December finished at 129.78 cents, 3.60 cents higher; estimated volume was 26,799 contracts.    

Keith Brown can be reached at commodityconsults@gmail.com

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