DTN Cotton Close: Market Shadows Dow Jones

It was clear in Wednesday’s session that cotton merely shadowed the Dow Jones. That is when the Dow weakened, ditto the cotton market, and the converse held true. Still, traders await Thursday’s weekly export sales report, which previously showed stout sales of 350,000 bales.

After Thursday’s weekly export sales report, cotton traders will key in on Friday’s jobs data. The Labor Department is expected (on Friday) to report that the economy added 440,000 jobs in November, down from the 638,000-job level in October. Private payrolls are estimated to grow by 590,000. Traders expect to see a 6.7% unemployment rate, down from 6.9%.

Traders are concerned with the listless action exhibited by the cotton market versus positive outside markets. The U.S. dollar is punching out two-year lows, while the Dow Jones nears all-time highs. However, some of the market’s resistance may be linked to its overbought condition. Perhaps complicating that situation is the fact speculators increased their net long position, according to the latest CFTC data.

Wednesday, March cotton closed at 71.60 cents, down 0.59 cent, July settled at 73.24 cents, down 0.53 cent and December 2021 ended at 70.55 cents, down 0.45 cent. Estimated volume was 27,718 contracts.

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