Price action: March cotton surged 268 points to 91.78 cents and notched a 467-point gain on the week.
5-day outlook: March cotton bulls carried the torch to a near 18-month high, with persisting optimism stemming from another day of record highs across equities. Inflation fears are seemingly easing across the marketplace amid keener risk appetite this week. However, near-term overbought conditions in the natural fiber could spur a correction, especially with China’s approaching Lunar New Year holiday, which begins this weekend. Chinese markets will be closed for several days next week for the annual holiday.
30-day outlook: USDA’s Prospective Plantings Report will be especially important after USDA cut ending stocks this week to the lowest level since 2016-17 after increasing projected exports 200,000 bales to 12.3 million bales. While the current rally bodes well for planted acres, mother nature will ultimately dictate production, and be at the forefront of trade in the coming months when the growing season commences.
90-day outlook: U.S. export sales continue to at a notable clip, with USDA reporting net sales of 284,100 RB during the week ended Feb. 1. Net sales were down 19% from the previous week and 8% from the four-week average. China was the primary purchaser during the week, followed by Vietnam and Bangladesh. Traders will continue to closely monitor export activity as a gauge of the global economy.
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