Wednesday morning is just starting, but already the market has posted a 300-point range. Tuesday night saw cotton run higher as it was bullishly influenced by recovering outside markets. However, the market is still dealing with several negative fundamentals, including a strong U.S. dollar and the 2021 harvest.
Traders continue to watch for developments on the new omicron COVID-19 variant, with uncertainty around its rate of transmissibility and fears that it could evade vaccines.
Fed Chairman Jerome Powell indicated in testimony in front of Congress on Tuesday that the central bank may quicken the pace of its asset tapering schedule. Powell said that he thought the Fed could pull back its bond-buying program faster than the $15 billion-a-month schedule announced in November.
The cotton market is anticipating Thursday’s weekly export sales report from USDA. Last week’s report saw improved business but the emergence of the omicron variant on Friday caused the market to ignore those better numbers.
This Friday the Labor Department will report its jobs data for November. Last month’s report for October reported some 530,000 non-farms jobs were created.
For Wednesday, close-in support for March cotton is 104.50 cents and 103.75 cents, while resistance stands at 110.85 cents and 111.25 cents. The estimated morning volume is 22,302 contracts.