September 3, 2021
By Keith Brown, DTN Contributing Cotton Analyst
The cotton market started Friday higher and ended higher. A softer U.S. dollar, stemming from the wildly missed September jobs report, helped to buoy prices. In addition, traders are looking ahead to next week’s several cotton reports including crop condition, weekly export sales and the monthly supply-demand report.
The latter could prove very influential as USDA will supposedly address the rift between USDA’s acres and the FSA’s certified acres; at stake may be some 900,000 fewer 2021 acres.
The U.S. dollar fell to a one-month low Friday. To that end, given the jobs report, the Fed may have to place its tapering program on indefinite hold. Moreover, if next week’s reconvening Congress were to pass its $3 1/2 trillion social/infrastructure bill, it would be seen as highly inflationary and could put more pressure on the greenback.
Interestingly, December cotton has yet to close above the 95.00-cent level. If it were to accomplish that endeavor, then the chart technician community would expect the August high of 96.71 cents could be challenged. The port of New Orleans remains closed for an unspecified period of time.
Although cotton is shipped from other ports, such as Houston, Fresno and Savannah among others, a dynamic export trade is an all hands-on deck proposition. Thus, even as demand appears decent, the availability of supply due to logistics continues to be a big concern. The simplistic bottom line is if it can’t get shipped, then no one is going to buy it.
Weather-wise, much of the cotton belt is expected to see below-normal precipitation in both the six- to 10 and eight- to 14-day forecasts. Currently, West Texas is receiving weather it needs, that is hotter temperatures for proper development. With that in mind, we note the harvest is over the hill. In fact, on average, by mid-September 45% of the U.S. crop’s bolls are typically open, with 8% harvested.
For Friday, December settled 94.02 cents, up 0.73 cent, March ended at 93.26 cents, up 0.62 cent and December 2022 ended at 83.26 cents, 0.28 cent higher; estimated volume was 24,422 contracts.