DTN Cotton Open: Sharply Lower on Fed’s Minutes

    Mid season cotton. Photo: Jerry Goodson, OSU

    The cotton market is sharply lower Thursday as the Federal Reserve released its meeting minutes with the notion of beginning to taper this year. Tapering involves the reduction or cessation of buying U.S. debt to artificially hold rates down. It is thought soon afterwards the Fed indeed would hike interest rates.

    USDA issued its weekly export sales report Thursday. A summary follows:

    Net sales of 242,400 RB for 2021/2022 primarily for China (161,900 RB, including 3,400 RB switched from Singapore, 600 RB switched from Hong Kong, and decreases of 11,100 RB), Turkey (46,100 RB, including decreases of 2,800 RB), Pakistan (16,400 RB, including decreases of 700 RB), Vietnam (12,400 RB, including 4,000 RB switched from China, 1,000 RB from Japan, and decreases of 1,400 RB), and Peru (4,900 RB), were offset by reductions primarily for Singapore (3,400 RB) and Japan (1,400 RB).

    Total net sales of 59,500 RB for 2022/2023, were for Pakistan. Exports of 221,100 RB were primarily to Pakistan (49,600 RB), Vietnam (38,000 RB), Turkey (31,700 RB), China (22,100 RB), and Bangladesh (17,600 RB).

    Net sales of Pima totaling 10,600 RB primarily for China (3,800 RB, including 300 RB switched from Germany), India (2,600 RB, including decreases of 600 RB), Pakistan (2,200 RB), the United Arab Emirates (900 RB), and Turkey (500 RB), were offset by reductions for Germany (300 RB).

    Exports of 3,700 RB were to India (1,400 RB), China (1,100 RB), Peru (800 RB), and Pakistan (400 RB).

    The U.S. dollar is higher Thursday as a result of the expected tapering, as well as increased COVID infections. In fact, the Greenback posted a new annual high of 9351 just this morning. A strong dollar is bearish to the exportation of U.S. commodities.

    For Thursday, close-in support for December cotton is 93.10 cents and 92.75 cents, while resistance stands at 95.55 cents and 97.80 cents. The estimated morning volume is 9,971 contracts.

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