The cotton market ran higher Tuesday, with the old-crop contracts nearing their contract highs, while the new crop (December 2022) actually posted a new life-of-contract high.
The outstanding driver for cotton prices, among other fundamentals, is the recurring theme of rising inflation. Thus, despite widening concerns over the omicron variant, in their anticipatory nature, many markets seem to be looking beyond the variant when demand for goods and services could wildly surge.
Traders are highly anticipating this Thursday’s weekly export sales. Last week saw sales of 192,000 bales and higher shipments of 162,000 bales. For all of 2021, China was the top buyer of U.S. cotton.
OPEC elected to hold to its daily production amount of 400,000 barrels in its virtual meeting among its membership. Russia was also participating. Although this move was expected, energy prices still ran demonstratively higher. Currently, there are some production troubles in Libya and Ecuador. It is widely thought that higher oil prices make synthetic materials, a possible substitute for cotton, more expensive.
Tuesday, March cotton settled at 116.39 cents, up 3.16 cents, July ended at 110.50 cents, up 2.00 cents and December finished at 94.02 cents, higher 1.07 cents; estimated volume was 32,721 contracts.