The cotton market ended markedly lower Thursday amid poor export sales and holiday technical selling. Thursday morning’s current crop year sales were slightly higher than last week’s report at 138,000 bales, but actual shipments were only 77,000 bales. The low exports number suggests the industry remains handcuffed by the global supply chain crisis.
Spot December is gearing up for its delivery period, which starts this Tuesday. To avoid the machinations of the notice period, participants must vacate their spot positions by Monday’s settlement. December cotton’s delivery period will run to December 8, the final trading day for the contract. As a sidebar, it is worth noting that the U.S. remains the world’s top exporter of cotton and accounts for nearly one-third of the global export total.
However, given the proximity, Australia should see a larger increase this season, although they are in a political spat with China. Both Brazil and India are expected to have a sizable decline in their cotton exports during the 2021/22 season due to adverse weather and currency conversions. The two nations combined together account for nearly 30% of the world’s cotton trade.
Fears of inflation have sent the Greenback higher as traders anticipate a sooner-than-later rate hike. However, suddenly there is a challenge to the chairmanship of the Fed. Rumors have it that Biden may replace Powell with Fed Governor Lael Brainard. Policy strategists say it’s more likely Powell will retain his post, but if Brainard is chosen by President Biden, the financial markets could see her as being more dovish.
The United Auto Workers, which represents the 10,000 striking workers from a dozen Midwest Deere & Co. factories, announced Wednesday night that its members had voted 61% to 39% to accept a new deal. The agreement includes an $8,500 ratification bonus, an immediate 10% increase in wages with further increases over the life of the six-year agreement, and other benefits including retirement boosts.
Thursday, December settled at 117.59 cents, down 2.11, March ended at 115.14 cents, down 1.78, and Red December (2022) ended at 91.79 cents, 0.14 lower. Thursday’s estimated volume was 32,940 contracts.