The cotton market finished moderately lower Wednesday amid a weaker Dow Jones, a slightly stronger dollar and, to some degree, a dose of end-of-the-month squaring by speculators. Traders are also anticipating Thursday’s weekly export sales for some sort of bullish help.
The Federal Reserve announced it would keep interest rates steady, as well as maintaining its $120 billion monthly bond purchase program. The Dow Jones sold off after the news, while the dollar eased higher.
Traders will also assess Friday’s spec-hedge data from the CFTC. If another round of net selling is reported involving the funds and trend-following speculators, traders may get the idea that an even deeper decline may be at hand.
Technically, the cotton market is massively “overbought”, as the rally has extended some ten months. Thus, the market is beginning to show some fundamental wear and tear and is in need of new positive news.
For Wednesday March cotton settled at 80.84 cents, down 0.87 cent, July finished at 82.86 cents, down 0.83 cent and December cotton closed at 78.08 cents, down 0.61 cent; estimated volume was 34,744 contracts.