After taking a momentary “bearish breather” Thursday, the cotton market has regrouped and seems ready to resume its upward trend. The market initially was spooked lower by overbought conditions and a faltering Dow Jones. As of now, the cotton seems to have all of those distractions in perspective.
Friday morning the Labor Department issued its jobs data for December and the numbers fell short of expectations. Overall, nonfarm payrolls rose by 199,000 in December, far fewer than the 422,000 estimate. The unemployment rate dropped to 3.9%, better than the 4.1% estimate, and wages increased more than expected, rising 4.7% year over year.
Cancellation fears are increasing among traders. Thus far, accumulated exports for 2021/22 have reached 3.037 million tons, which is down from 5.533 million last year, and the lowest in at least five years. The five-year average is 3.968 million. The main culprit is the supply-chain crisis.
For Friday, close-in support for March cotton is 115.10 cents and 114.40 cents, while resistance stands at 117.70 cents and 118.50 cents. The estimated morning volume is 4,487 contracts.