Cotton Fading through Morning Trade

Cotton futures followed the Friday rally with triple digit weakness into the new week. Friday’s cotton rally set a new high for the week in the Dec contract, and brought it to within 120 points of the post WASDE high. Cotton has stayed between 119.59 and 112 since the gap higher after the August 12th report. December was up 357 points on the day with the other front months 289 to 494 points higher. 

The Fed met in Jackson Hole for their regular economic outlook conference. Jerome Powell mentioned some short term pain is expected to rein in inflation, with a short but generally hawkish speech. The stock market sold off hard following the news that the Fed would not be refilling the cheap money punch bowl.  

Commitment of Traders data had managed money traders as 50,778 contracts net long after net new buying extended their net position by 6,016 contracts through the week that ended 8/23. Commercial cotton traders were adding hedges for a 74,935 contract net short as of 8/23. Last week the commercials were 74,118 contracts net short. 

The USDA’s weekly Cotton Market Review had the week’s average spot price as 121.8 cents/lb, for the 2,940 bales sold at spot through the week. The MYTD sales reached 6,751 bales through the first 3 weeks, compared to 8,786 bales during last year. The Cotlook A Index (old crop) was back up by 175 to 132.25 cents. USDA raised the AWP for cotton another 258 points to 104.48. 

Oct 22 Cotton  closed at 122.12, up 494 points, currently down 128 points

Dec 22 Cotton  closed at 117.68, up 357 points, currently down 231 points

Mar 23 Cotton  closed at 114.37, up 354 points currently down 221 points