The cotton market nearly traded the 92-cent level as it posted another round of new contract highs. The market is being driven by a sturdy bullish trend and hopes global demand will improve. There are fears rising from the COVID-19 delta variant may cause economic disruptions, but as the world becomes more vaccinated, the global economy should improve. It was interesting to see cotton higher Friday in the fact of a very stout U.S. dollar. The greenback, as with cotton, was higher on larger-than-expected jobs data from Friday’s unemployment report.
Next week, the cotton market will see condition data on Monday and then weekly export sales, plus the huge WASDE numbers next Thursday.
Friday afternoon the CFTC will report on the status of market participants, chiefly the managed-money funds. Several subscribers have asked why this commentary places so much emphasis on that particular group of traders, hardly ever acknowledging the commercials and small traders. The answer is that, for the most part, commercials will always be net short by the nature of their merchandising endeavors.
Small traders rarely move the market higher or lower. Thus, the “big money” lies with the funds, they tend to be the main drivers for prices based on their indicators and algorithms.
Through Friday’s settlement, December cotton was 2.31 cents on the week and month, and 18.00 cents on the year.
Friday, December settled at 91.70 cents, up 1.02 cents, March ended at 91.33 cents, plus 0.94 cent and December 2022 ended at 82.25 cents, 0.40 cent higher; estimated volume was 30,616 contracts.