Price action: March cotton rallied 144 points to 83.95 cents, a 264-point week-over-week gain.
5-day outlook: Cotton surged to a two-and-a-half-month high in early trade and notched gains for the fourth straight session amid U.S. dollar weakness, a rally in equities and robust export demand. Meanwhile, general risk-off sentiments were largely shaken amid the Senate’s passing of a measure to avert a partial government shutdown. Next week, traders will continue to closely eye outside markets and economic data which could provide demand clues and insight into when the Federal Reserve might begin to trim interest rates.
30-day outlook: The National Cotton Council will conduct its annual meeting February 16-18, which will provide the first look in to 2024-25 U.S. cotton acres. Weather will then become driver as planters begin to roll across the southernmost portions of the country. World Weather Inc. maintains West Texas will continue to dry out for at least another few days and South Texas precip will be restricted as well. West Texas may experience a few bouts of light rain starting mid-week next week and continuing into the following weekend. Meanwhile, the forecaster reports most other southern U.S. crop areas have favorable soil moisture with little change likely. The Texas Blackalnds and Coastal Bend as well as the Delta will turn much wetter next week. Southern California and southwestern desert areas are waiting for additional moisture, and it may occur periodically in the next couple of weeks, though early indications suggest it will be light for a while.
90-day outlook: Over the past few months, traders have been leery of drop in U.S. export demand as the Chinese economy sputters amid a battle with looming deflationary conditions. However, USDA’s weekly export sales data has continued to prove consistent, while shipments have set new records in three of the last five reports, remaining strong at more than 200,000 bales in all five. Earlier today, USDA reported weekly export sales for the week ended Jan. 11, which showed net sales totaled 420,000 RB during the week, which rose 60% from the previous week and 85% from the four-week average. Shipments of 257,700 RB notched a marketing-year high and were up 13% from the previous week and 15% from the four-week average. China, Vietnam and Pakistan were both the top purchasers and destinations for the natural fiber during the week.
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