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DTN Closing Cotton            08/16 13:35

   Cotton Hits Limit-up, Then Wobbles

   The cotton market traded limit-up in Tuesday's session, but then sold down 
to the daily lows.

Keith Brown
DTN Contributing Cotton Analyst

   The cotton market traded limit-up in Tuesday's session, but then sold down 
to the daily lows. Obviously, at such price heights, the air becomes a bit 
rarefied. Tuesday's volume was super-heavy at 75,000 contracts-plus. One has to 
look back to February 2021 to find a day with higher volume.

   USDA's supply-demand update of last Friday, reduced the 2022 crop by nearly 
3 million bales, resulting in speculators, hedgers and mills scrambling to buy. 
In fact, cotton production is at its lowest level since the 2009-10 marketing 
year. However, China's economy is in retraction so there is doubt about future 
demand.  

   Crude oil was sharply lower Tuesday, as traders fear a widening of the 
global recession. Additionally, the EU is trying to broker a deal between the 
U.S. and Iran. If an agreement can be reached, then an additional million 
barrels a day could be added to the world's production numbers.

   The U.S. dollar was higher Tuesday, as there are expectations that the U.S. 
economy will be stronger than Europe, and that the Federal Reserve will 
continue to hike interest rates. Europe is struggling with an energy crisis 
after imposing sanctions on Russia due to its invasion of Ukraine. Russian 
state gas company Gazprom said that European gas prices could spike by 60% this 
winter.

   For Tuesday, December closed at 116.85 cents, up 3.26 cents, March 2023 
finished at 113.35 cents, up 2.71 cents and July 2023 settled at 106.20 cents, 
up 0.05 cent; estimated volume was 82,272 contracts.

   Keith Brown can be reached at commodityconsults@gmail.com




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