Cotton Ends Higher Tuesday
Jun 06, 2023
After a period of wobbly trading, the cotton market ended its Tuesday session a tad higher.
After a period of wobbly trading, the cotton market ended its Tuesday session a tad higher. The market had been struggling amid weather, position-squaring and the strength of the U.S. Dollar. Later this week, traders will see a new round of export sales, as well as fresh supply and demand updates.
Weatherwise, the near-term forecast for West Texas continues to show some rain, perhaps less than one-half inch. However, the 6- to 10- day forecast carries normal chances of rain, and normal to slightly above normal temperatures. The extended 8- to 14-day outlook indicates below-normal precipitation and increased chances for above-normal temperatures.
The U.S. Dollar Index continues to wind its way higher, as traders anticipate the Federal Reserve's June meeting. The belief is the central bank will raise interest rates one-quarter point, but there are developing fears of subsequent rate hikes, given the current inflationary environment. Of course, a strong U.S. dollar is not good for oil demand and agricultural exports.
The energy complex has been unusually two-sided in its recent trading efforts. Apparently, weaker fuel demand, slower economic growth in China, and growing recession fears are undercutting Saudi Arabia's oil reduction plan, announced this past weekend. The Saudis said they would reduce monthly production by one million barrels, taking production from 10 million to 9 million barrels per day. Some traders therefore think OPEC is unlikely to achieve a strong or sustainable price increase between $80 to $90.
Tuesday, July settled at 85.34 cents, up .55 cent and December '23 ended at 81.78, .36 higher. Tuesday's estimated volume was 47,312 contracts.