DTN Cotton Close: Higher at Month and Quarter End

    Mature cotton bolls in early morning light. ©Debra L Ferguson

    Sloughing off the fears of strong position squaring at the end of the month and the third quarter, cotton ended with its eighth consecutive session of higher closings. The market is obviously concerned with the potential crop setbacks across the Northern Hemisphere.

    Those worries include the U.S., India and China. Of course, there is a corresponding hefty demand for cotton as well. Thursday, USDA reported a half-million-plus bales were purchased last week with China buying the lion’s share.

    On Friday, the CFTC will update its commitment of traders data. At their peak, the managed-money funds were long some 91,000-plus contracts, but the “Evergrande Break” did take out some 10,000 contracts, leaving them net long about 81,000 contracts. However, since that time, the market has skyrocketed with massive speculative fund participation, so Friday’s number could prove dynamic.

    The six- to 10- and the eight- to 14-day weather outlooks indicate more of a dry out for Texas and the U.S. Delta. However, the Southeast will see above-normal precipitation, potentially causing additional production problems. If the drying trend were to persist, some traders may try to pick a technical top in the market, given how extremely overbought it has become.

    For Thursday, December settled at 105.80 cents, up 3.86 cents, March ended at 103.88 cents, up 3.14 cents and December 2022 ended at 85.95 cents, 0.36 cent higher; estimated volume was 46,477 contracts.

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