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DTN Closing Cotton 12/09 13:31
Cotton Ignores Supply and Demand Data?
The cotton market closed slightly up today, despite superficially bearish
numbers on the December WASDE.
Keith Brown
DTN Contributing Cotton Analyst
The cotton market closed slightly up today, despite superficially bearish
numbers on the December WASDE. Most production and carryout categories were
increased. Traders will now look to the Federal Reserve and Thursday's exports
for any influences.
As mentioned, USDA released its monthly supply-demand numbers with the
following results:
"This month's 2025/26 U.S. cotton balance sheet shows slightly higher
production, a reduction in mill use, and larger ending stocks compared to
November. Beginning stocks, exports, and imports are unchanged. Production is
increased 1 percent to 14.3 million bales as yields are raised for most States
in the Southeast and Delta. As a result, the national average yield is 10
pounds higher at 929 pounds per acre. Mill use is reduced by 100,000 bales to
1.6 million, the lowest in almost 150 years. Ending stocks are now projected at
4.5 million bales, or 32.6 percent of disappearance. The projected season
average farm price is reduced to 60 cents per pound, a decline of 3 cents from
last year and 31 cents from 2021/22. The global 2025/26 balance sheet for
December shows slightly lower production, consumption, and trade, but higher
ending stocks compared to last month. Global cotton production is reduced by
almost 300,000 bales, mainly reflecting lower area and production in the
African Franc Zone partially offset by a larger crop in the United States.
Consumption is also lowered by almost 300,000 bales based on lower mill use in
Brazil, the United States, and a few Central American countries. Global trade
is reduced by over 250,000 bales based on adjustments for lower production and
updated trade data for several countries."
The Federal Reserve will meet today and announce on Wednesday at 2 p.m. EST,
any action it will take regarding U.S. interest rates. According to the CME
FedWatch Tool, the odds for a cut have moved from an earlier 40% chance to the
current 87% for a quarter-point reduction.
The afternoon, the CFTC will issue another back-logged Commitment of Trader
Report, as well as this Friday. At last count, the managed-money funds are
net-short some 74,000 contracts.
This Thursday at 8:30 a.m. EST, USDA will release another catch-up export
sales report, covering the period from Nov. 13. Monday's back-logged report
(Nov. 6) had net sales for both crop seasons totaling 388,900, with weekly
shipments of 136,000 bales.
For Tuesday, March 2026 went out at 63.86 cents, plus 18 points; July was
65.91 cents, up 11 points; and December 2026, halted at 67.53 cents, 13 points
higher. Tuesday's estimated volume was 38,105 contracts.
Keith Brown can be reached at commodityconsults@gmail.com
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