Cotton Market Awaits Fed Decision Wednesday

After attempting to post a counter-Tuesday trade yesterday, the cotton market is seeing little upside follow-through today. Traders are anxiously monitoring the U.S.-Iran conflict, today’s Fed announcement, and are preparing for the enviable harvest season. 

Today at 2 p.m. EDT, the Federal Reserve will announce its latest monetary policy decision. The “smart money” is betting on a quarter-point increase in the Fed Funds rate. In fact, using the CME FedWatch tool, there is a 90% chance for a hike on Wednesday. 

Crude Oil is lower today, as a weekly report on U.S. inventories revealed an increase in supply. Nonetheless, worries remain over escalating U.S.-Iran tensions. Recent strikes by the Houthis on a Saudi pipeline have paralyzed the only alternate flow of Middle Eastern Oil beyond the Strait of Hormuz.  

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. 

The October Cotton Contract will enter delivery on Sept. 24. Its current open interest stands at 137 contracts.  

For Wednesday, close-in support for December Cotton stands at 83.50 and 83.00 cents, with resistance around 85.75 and 86.15 cents. This morning’s estimated volume is 7,028 contracts.

Keith Brown can be reached at commodityconsults@gmail.com or by calling (229) 890-7780.