Cotton Lower on US Debt Worries, G-7
May 22, 2023
The cotton market was materially lower Monday amid fears of sluggish U.S. debt ceiling talks and the G-7's stance on China.
The cotton market was materially lower Monday amid fears of sluggish U.S. debt ceiling talks and the G-7's stance on China. Supposedly, House Speaker McCarthy and President Biden will meet this afternoon to try to come to an agreement on how to finance the debt of the U.S. government to avoid default. In addition, bearish comments on China emerging from the weekend meeting of the G-7 nations were seen as negative by traders.
The U.S. Dollar Index was higher Monday, as investors continue their Fed watch for the possibility of future rate hikes. Also, there are heightened concerns over the U.S. debt talks unfolding in Washington. The greenback received a mild boost when a certain Fed governor indicated that the Fed may still need to raise its benchmark interest rate by another half-point this year.
Monday afternoon at 4 p.m. EDT, USDA will issue its weekly progress report. Last week saw the nation's cotton crop 35% planted, this compares to its 36% completion pace of its five-year average.
Weatherwise, there is some rain for the Texas Panhandle over the next one-to-five days, however it may be much lighter than those episodes seen last week. The six-to-ten model indicates near-normal temperatures and above-normal precipitation for those northern and western parts of Texas.
After Monday, there will be 24 days till the expiration of July options. The contract will enter delivery on June 26.
Monday, July settled at 85.32 cents, down 1.40 and December 2023 ended at 83.38, 51 points lower. Monday's estimated volume was 36,924 contracts.