By Keith Brown, DTN Contributing Cotton Analyst 

With the old crop leading the way, the cotton market was sharply higher Wednesday. Both the May and July contracts finished with triple digit-gains; new-crop December was up about 0.63 cent. Some traders believe Thursday’s weekly export sales could be substantial given USDA recently cut domestic carryout under 4.0 million bales. The only way to ration a potential tight supply is through higher prices.

Last week saw sales of 122,300 bales, which was down 55% from the previous week’s tally. Shipments were 313,000 bales, also down, but only 16% versus the prior week.

Open interest, which is the total numbers of all long and short participants, continues to trend lower even as prices move higher. Such a situation is a near textbook case of short covering. Such moves are often considered weak in strength as the reason for such buying is certain traders are exiting losing short positions.

The short- and intermediate-term weather forecast remains hot and dry for West Texas. Texas is the largest cotton producing state in the U.S.

Wednesday, May cotton closed at 84.83 cents, up 1.06 cents, July settled at 86.23 cents, up 1.06 cents and December ended at 83.69 cents, up 0.63 cent; estimated volume was 22,097 contracts.