Overnight, the cotton market posted another round of life-of-contract highs. Prices are now equal to those of June 2011. Textile mill fixations and outright speculative buying are undergirding the trend. The cotton market is also benefitting from a retreat in the U.S. dollar, surging energy prices and a recovery in the various stock markets.
Traders will monitor the situation between Russia and Ukraine, as well as the possible price effects stemming from the Chinese New Year celebrations and the Beijing Olympics. Some participants feel once the Olympics conclude, both Russia and China will increase their respective political pressures on Ukraine and Taiwan. Such action could cast a bearish pall over global equity and commodities markets.
This Thursday USDA will issue fresh export sales data. Last week saw huge sales of 400,000 plus bales, along with very respectable shipments numbers. Given that the supply-chain crisis has jammed international commerce, textile nations are having to dip into their own cotton reserves. Global stocks are declining because of this.
This Friday the Labor Department will issue its monthly jobs report. This report will play a key role in the Federal Reserve’s pace of hiking rates. If the jobs reported are lower than expected, then the Fed may be forced to temper its plan to hike interest rates.
Tuesday close-in support for March cotton is 126.80 cents and 124.80 cents, while resistance stands at 130.00 cents and 130.75 cents. The estimated morning volume is 8,726 contracts.