Cotton futures were sharply higher Friday, overcoming Thursday’s bearish session. Thursday’s decline was caused in part by poor weekly sales, end-of-the-month position squaring, scattered West Texas rains, and a wobbly Chicago grain market. However, heading into the new month of May, most weather forecasts paint a drier and hotter situation for the Southwest. The outlook was somewhat validated by NOAA’s Drought Monitor, which updates every Thursday.
Friday afternoon, CFTC will issue its weekly Commitments of Traders report. Interestingly, certain managed-money funds have been heavily net long the cotton market for well over a year. However, the steep price declines of February and March greatly pared their positions. Thus, traders will be keen to see if those funds are coming back to the long side of the market.
Overnight, China announced a new import quota amount for cotton. China’s National Development and Reform Commission said it had issued an additional 700,000 metric ton (mt) quota for cotton imports this year, all of which is for nonstate traders and will be subject to a sliding scale tariffs system.
At the end of Friday’s session, July cotton is down .72 cent on the week, but up 5.91 cents on the month and 8.91 cents on the year.
Friday, July cotton closed at 88.08 cents, up 1.54 cents; December settled at 85.06 cents, plus 1.22 cents; and March 2022 ended at 84.31 cents, 1.34 cents higher. Friday’s estimated volume was 18,470 contracts.