Continuing on its upside tear, the cotton market traded the $101.55 level Tuesday. Such prices have not been seen in 10-plus years. Strong Chinese demand, along with fears of a potentially shaky Texas harvest, are collectively undergirding prices. The market is also anticipating the political situation regarding new stimulus spending now occurring in the U.S. Congress.

Traders will see new weekly export sales this Thursday, in which they hope to see another huge Chinese sales number. Thus far China has been the top buyer of U.S. cotton. Interestingly, this demand is unfolding even as the Chinese financial market sweats the outcome from the beleaguered real estate developer Evergrande.

This Thursday marks the end of the month and end of the quarter, thus the next two days may see unbridled volatility. We suspect speculators have been huge buyers of ICE Futures. In fact, the cutoff for this week’s Commitment of Traders data is today. The CFTC will issue its update this Friday at 4 p.m. EDT. Last tally showed the managed-money funds had liquidated some 10,000 contracts, lowering their net-long position to 85,000-plus contracts.

The five-day weather outlook shows moderate to heavy rainfall for Texas and Oklahoma with only moderate rains across Louisiana and Arkansas. The 6- to 10-day and 8- to 14-day forecasts call for above normal rainfall for West Texas.

For Tuesday, December settled 100.03 cents, up 1.98 cents; March ended at 98.70 cents, up 1.88 cents; and Red December (2022) ended at 85.50 cents, 1.04 cents higher. Tuesday’s estimated volume was 50,803 contracts.