DTN Cotton Close: Sleepy Trade Continues

    Coosa, Georgia, cotton field ready for harvest. Photo: Nick McMichen

    Despite surrounding markets moving higher, cotton could only manage a tightly closed trade. That is a small range, and muted volume. Traders continue to mark a harvest that is lagging and remain greatly concerned over the supply-chain ordeal.

    To the latter point, the market will need to see an uptick in this week’s shipment numbers on the export sales report. Lately, actual shipments of cotton have been greatly reduced due to the higher costs of booking container ships.

    Weather-wise, the six to ten-day forecast calls for below normal precipitation across much of the Cotton Belt, while the 8 to 14-day specifically indicates below normal temperatures from central Texas to the Southeast. Rain is expected to be below normal for the south but slightly above normal for Texas.

    The energy complex continues to post higher highs, which is driving up the costs of production inputs for U.S. farmers. Roughly speaking, and we emphasize the word roughly, cotton costs about $600 per acre to grow, corn some $700, and soybeans about $400 per acre. Naturally, costs can vary with locales. Still to some degree, it may fall to bankers and lenders rather than growers, to determine the 2022 agricultural acre mix.

    This Thursday the Commerce Department will report third quarter GDP numbers. Currently, economic analysts believe Q3 levels will be lower. The Q2 growth rate was 6.7%, slightly higher than Q1’s 6.3% pace. However, the anticipated growth rate for Q3 is 2.8%.

    For Tuesday, December settled at 108.71 cents up 0.17 cent, March ended at 106.87 cents plus 0.31 cent, and Red December (2022) ended at 89.82 cents, 0.06 cents higher. Tuesday’s estimated volume was 22,530 contracts.

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