Cotton Market Choppy to Lower Wednesday

The cotton market was choppy to lower Wednesday, albeit the session showed very moderate volume. Traders will assess today’s Fed action and then focus on exports-sales and the CFTC update.  

The Federal Reserve did approve its first interest rate hike in more than three years and indicated another to come. The increase is part of an effort aimed at combating inflation brought on by spiraling oil prices and other factors.

In a move that markets widely anticipated, the central bank’s Federal Open Market Committee voted 12-0 to increase its key interest rate by a quarter percentage point, or 25 basis points. The move brought the overnight funds rate to a target range of 3.75%-4%.

Tomorrow at 8:30 a.m. EDT, USDA will release fresh exports-sales data. Last week’s report showed combined seasonal sales of 76,318 bales. That amount was up from 27,525 bales sold in the previous week. Currently, cumulative sales have reached 38% of the USDA’s current marketing year forecast versus a five-year average of 47% at this juncture of the season. 

On Friday, the CFTC will update its closely watched Commitments of Traders Report. Last week’s data showed managed money traders were net sellers of 7,807 contracts, which reduced their net long carry to 100,170. Their record stands at 108,788 contracts. 

China’s State Reserve had a second auction, which did not sell out but was almost 97% sold. Today was the 42nd auction. Offers were 35,274 bales, while purchases tallied about 34,117 bales. Total sales thus far stand at about 1,479,575 bales.

For Wednesday, December closed at 84.36 cents, minus 12 points, March 2027 finished at 86.89 cents, off 10 points, and July 2027 settled at 88.04 cents, unchanged. Wednesday’s estimated volume was 40,922 contracts.

Keith Brown can be reached at commodityconsults@gmail.com