By Keith Brown, DTN Contributing Cotton Analyst
March 24, 2021
There seems to be no rest for the weary as the cotton market finished with near triple-digit losses Wednesday. It was the lowest close for May cotton since Feb. 4. Incidentally, Feb. 4 was the day for the highest recorded open interest level for the entire move.
Open interest is the total number of all longs and short in the market. At any rate, on Feb. 4, open interest was 259,950 contracts, while, as of Wednesday, it was 229,612. The fact the number decreased amid falling prices indicates bullish longs were exiting their positions.
Thursday morning, USDA will issue its weekly export-sales data. Last week saw a huge sales number, but the market was unmoved. However. if Thursday’s business is as close or greater, then traders would have to believe USDA would be forced to increase exports and thus lower carryout on its next supply-demand report.
The U.S. dollar maintained its higher push Wednesday, although its overall trend is down. The market had actually become oversold, and was initiating a short-covering recovery, when the new dynamic of rising interest rates unfolded, allowing the greenback to trade even higher.
It has been generally thought the zealous amount of stimulus spending approved by the U.S. Congress would ultimately weaken the dollar. Thus, that has not happened.
Wednesday, May cotton closed at 82.44 cents, down 1.09 cents, July settled at 83.53 cents, down 1.08 cents and December ended at 80.38 cents, down 0.94 cent; estimated volume was 31,317 contracts. (Source: Agfax.com)