December cotton closed up 3.53 cents at 95.99 cents Friday, a new contract high and among the highest closes for a December contract since 2012. The week started with a steep 3.31-cent drop as investors panicked over Evergrande’s possible debt default in China, but quickly bounced back, helped by Wednesday’s repeated Fed commitment to low interest rates and Thursday’s strong report of 345,400 running bales of export sales, nearly two-thirds of which went to China.
Friday’s surge of buying may have been encouraged by the possibility of Hurricane Sam forming in the Atlantic. The National Hurricane Center expects the storm to strengthen Saturday, but it is too early to tell where it might make landfall. On Monday, USDA reported 9% of the cotton crop had been harvested so much is still vulnerable in fields.
From a technical view, December cotton’s new contract high is obviously bullish and continue an uptrend that since emerging from pandemic lows in the summer of 2020. Friday afternoon’s CFTC report showed noncommercial net longs dropped 13,198 in the week ended Sept. 21 to 95,025, still a heavy showing of speculators, protected for now by cotton’s higher prices.
Dow Jones reported the Cotlook A Index was up 0.90 cent at 101.25 cents per pound Thursday, Sept. 23. According to ICE, certified cotton stocks totaled 60,107 on Sept. 23, the same as the previous day.
In cash online trading, The Seam showed 1,857 bales sold Friday at an average price of 90.77 cents. Average loan value was 54.25 cents and 3,222 bales were offered.
In outside markets, most other commodities were mixed Friday. The December U.S. Dollar Index is up 0.23, while Dow Jones Industrial Average futures were down 33 points. November crude oil was up $0.68 at $73.98, its highest close this year and not showing much concern about China’s economic problems.