DTN Cotton Close: Lower on Impending Harvest

Photo: Nick McMichen

The cotton market ended lower Thursday as traders are beginning to look ahead to a huge crop. However, adverse weather across the south from Hurricane Nicholas, among other weather events, is disrupting the development of that crop.

On the other hand, the West Texas crop is enjoying hot and dry conditions, but to some degree we now hear there is too much of that. At any rate, the majority of the U.S. 2021 crop is termed a late crop, making it more susceptible to season-ending troubles.

Friday afternoon, the CFTC will update the traders as to who stands where, and by how much. At last count, the tabulators indicated the managed-money funds are net-long some 89,000-plus contracts, rivaling their top long position of 108,000 in June of 2018.

Thursday’s export sales pushed the market closer to its average pace of 300,000 weekly sales. That is, five out of the last six weeks sales have averaged some 300,000 bales, but then two weeks ago sales fell to 125,000. However, that was followed by last week’s huge 472,000 bale sale.

Unfortunately, Thursday’s number of 284,000, although it was slightly off-key, it carried the silver lining that China was the top buyer for the past weeks. It bought 261,000 bales last week and was in for 184,000 bales.

Most traders continue to fret over the Federal Reserve’s meeting next week. Supposedly, the Fed will announce a policy of limited tapering, which some believe is the initiation of rising interest rates.

For Thursday, December settled at 92.51 cents, down 0.86 cent, March ended at 91.80 cents, down 0.82 cent and December 2022 ended at 82.25 cents, 0.76 cent lower; estimated volume was 20,685 contracts.

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