The cotton market is lower Thursday as it is embracing poor weekly export sales, a hawkish Federal Reserve, and an overbought technical condition.
Thursday’s exports-sales were below those of last week, but China remained the front-row buyer. A summary of that business is as follows:
Net sales of 143,200 RB for 2021/2022 were down 26 percent from the previous week and 48 percent from the prior 4-week average. Increases primarily for China (47,000 RB), Pakistan (20,800 RB), Turkey (18,900 RB), Vietnam (15,200 RB, including 1,000 RB switched from South Korea), and India (14,500 RB), were offset by reductions primarily for Guatemala (2,100 RB) and South Korea (1,000 RB).
Net sales of 44,000 RB for 2022/2023 primarily for Pakistan (40,500 RB), were offset by reductions for China (400 RB). Exports of 104,900 RB were down 35 percent from the previous week and 22 percent from the prior 4-week average. The destinations were primarily to China (38,300 RB), Vietnam (15,900 RB), Pakistan (12,100 RB), Turkey (10,700 RB), and Indonesia (6,400 RB).
Net sales of Pima totaling 4,400 RB were down 38 percent from the previous week and 17 percent from the prior 4-week average. Increases were reported for China (2,600 RB, including decreases of 100 RB), Vietnam (1,000 RB), Thailand (600 RB), and Honduras (200 RB).
Total net sales of 900 RB for 2022/20223 were for India. Exports of 7,200 RB were up 3 percent from the previous week, but unchanged from the prior 4-week average. The destinations were primarily to India (2,400 RB), China (2,100 RB), and Thailand (2,000 RB).
Wednesday, the Federal Reserve released the minutes from its December meeting. That data re-enforced its plan of hiking interest rates to slow inflation. The Dow Jones and other financial markets took the news as negative.
Cotton is also somewhat in an overbought condition, having closed higher eight out of the last ten or so days. Thus, with Thursday’s news and the weekend ahead, traders are apt to book some profits if possible.
For Thursday, close-in support for March cotton is 114.90 cents and 113.65 cents, while resistance stands at 117.70 cents and 118.50 cents. The estimated morning volume is 5,804 contracts.