Cotton Paralyzed by Helter-Skelter Markets

Financial, equity, and agricultural markets are going off in all different directions. Fears of higher energy and fertilizer costs, coupled with falling stock markets, has the cotton market in somewhat of a paralytic state.

The U.S. dollar is sharply higher again Tuesday. Its rise is likely a flight-to-quality response to the Iranian situation. Currently, the Greenback has posted a new high for the year.    

Spot March cotton saw 96 delivery notices Tuesday. Thus far, some 600 delivery tenders have been issued. The delivery period runs through Monday, March 9.

Crude oil rose some $4 today, soaring for a third session as the U.S.-Israeli conflict with Iran widens. At risk is the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas typically passes. Tankers and container ships are avoiding the waterway after insurers cancelled their shipping policies.

The Climate Prediction Center reported 84% of the U.S. cotton area is in some form of drought conditions. The 6- to 10-day forecast calls for much-above normal temperatures for the U.S. Cotton Belt, however, there are also above-normal chances for rainfall for much of the same area.

Later in this week, traders will see weekly export sales on Thursday, rounded out by Friday’s jobs data.

Chart support for July cotton stands at 65.85 cents and 65.25 cents, with resistance around 67.00 cents and 67.25 cents. Tuesday morning’s estimated volume is 16,860 contracts.

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