DTN Cotton Open: Market Higher, Rethinks Data

    Line of modules during cotton harvest. ©Debra L Ferguson

    The cotton market is posting a timely recovery Friday morning as traders are re-emphasizing this week’s bullish news. On Wednesday, USDA sharply lowered the 2021 crop and then on Thursday, it reported strong weekly export sales. However, the market retreated Thursday in something of a buy-the-rumor-sell-the-news funk. Traders and the trade reassessed the situation. It all looks supportive Friday.

    From Thursday’s weekly export sales we note that cumulative sales for 2021/2022 have reached 10.994 million bales. Although that amount is down from last year’s pace of 11.86 million bales, it is above the five-year average of 10.816 million. The largest buyer this week was China at 140,453 bales, followed by Pakistan at 74,921 and India at 74,652. Those three countries represent 3 of the 4 top cotton-producing nations.

    The Commerce Department issued the monthly retail sales data Friday morning. The numbers fell much more than expected in December as surging prices discouraged consumers. The advance monthly sales report, to summarize 2021, showed a decline of 1.9%, also below industry expectations. The sales numbers were not adjusted for inflation, which indicated a slower ending to what had a strong 2021.

    For Friday, close-in support for March cotton is 116.40 cents and 115.90 cents, while resistance stands at 119.00 cents and 119.50 cents. The estimated morning volume is 4,801 contracts.

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