DTN Cotton Close
Posted : October 23, 2021

DTN Cotton Close: Market Has Orderly Retreat

October 1, 2021

After threatening the moon this week, the cotton market did experience a reasonable, but anticipated, correction Friday. Coming into Friday’s session, December cotton had already zoomed some 9.00-plus cents higher, so a bit of mitigation was expected. The source of the selling was producer hedging and speculative profit-taking. Volume was equally massive, compared to recent days.

Later Friday, the CFTC will issue its traders update. For well over a year, the managed-money funds have been net long. In fact, at times, their position has rivaled prior records, ebbing and flowing as the market has. It will be interesting to see their speculative stance Friday afternoon, given the shut off for that data collection was this past Tuesday.
It is worth noting that cumulative sales for 2021-22 have reached 7.22 million, down from last year’s 7.966. The five-year average for sales stands at 7.55 million bales. Sales have reached 49% of the USDA’s forecast for the marketing year versus a five-year average of 53%. The pace of sales for this marketing season appears to be gaining.

To that end, China has been a huge buyer of late. Just this past week, it bought some 418,000-plus bales. Although China’s commitments are down from a year, its current commitments for 2021-22 are the second highest on record for them.

For Friday, December settled at 104.53 cents, down 1.27 cents, March ended at 101.44 cents, down 2.44 cents and December 2022 ended at 85.09 cents, 0.86 cent lower; estimated volume was 50,212 contracts.

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