The cotton market is sharply lower Tuesday amid new fears over the omicron variant. Overnight, the head of Moderna suggested its vaccine may not be that effective on the new strain, causing most markets to fall Tuesday morning. In addition, cotton is in the heart of harvest, and that is pressuring prices.
USDA reported the harvest is 85% complete, versus last week’s pace of 75% gathered. The 5-year average stands at 79% harvested. Specifically, the top two producing states Texas and Georgia are 82% and 76% harvested respectively.
The CFTC’s delayed Commitments of Traders report showed managed money funds increase their net position to 83,793 contracts. However, this data is as of last Tuesday’s close so the market’s recent meltdown is essentially unaccounted for in this data.
Tuesday, Fed Chair Jerome Powell will testify as to how the omicron variant will affect the U.S. economy. In his prepared remarks, Powell worries that this new variant could “reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions,”. Treasury Secretary Janet Yellen will join Powell on Tuesday in testifying before the Senate Banking Committee.
For Tuesday, close-in support for March cotton is 106.00 cents and 115.10 cents, while resistance stands at 109.45 cents and 110.50 cents. The estimated morning volume is 27,872 contracts.