DTN Closing Cotton            02/17 13:35

   Cotton Market Closes Lower Tuesday

   With its own uninspired fundamentals, plus weaker outside markets, the 
cotton market could not "get-it-together" today.

Keith Brown
DTN Contributing Cotton Analyst

   With its own uninspired fundamentals, plus weaker outside markets, the 
cotton market could not "get-it-together" today. Essentially, prices were down 
as the ICE market was prepping for March cotton's imminent delivery, as well as 
other unfolding events.

   This week, China will celebrate the Lunar New Year holidays, meaning much of 
the nation's business activities may be slowed or shuttered altogether. 
Typically, a large part of the Chinese population will travel to their 
ancestral homes for family gatherings and celebrations.

   This Thursday and Friday, USDA will hold its annual Ag Forum, presenting 
certain 10-year projections for U.S. agriculture. In referencing cotton, the 
agency noted that the market year average price for upland cotton fluctuates 
during the projection period, starting at 65 cents per pound in nominal terms 
in 2026/27 before rising to 69 cents by 2030/31 where it remains for several 
years before slipping to 68 cents in the final several years of the projection. 
The US mill use remains near the lowest levels of the past century as increased 
competition from foreign manufacturing of cotton and synthetic fibers, such as 
polyester, has reduced U.S. mill use significantly since the late 1990s. Mill 
use is projected to decline during the projections, from 1.65 million bales in 
2026/27 to 1.55 million bales from 2028/29 forward. US upland cotton exports 
will rise 10.4 percent from 12.5 million bales in 2026/27 to a projection 
period high of 13.8 million bales in 2035/36.

   Weekly export sales will be delayed util Friday due to the observance of 
Presidents Day. Last week saw combined seasonal sales nearing 285,000 bales, 
off some 8%, while shipments were 188,600, down 20%. The report will be out at 
8:30 a.m. EST.

   Monday, Feb. 23, will commence the delivery process for March cotton. Any 
producer tied to the March contract must either flatten or roll by this Friday, 
Feb. 20, to avoid the delivery process. Current open interest for Spot March is 
41,054 contracts.

   The Climate Prediction Center continues to show large swaths of U.S. 
agricultural production areas with varying degrees of drought conditions. For 
cotton, the agency's current reading is 81% drought versus the previous level 
of 80%.

   For Tuesday, July closed at 65.37 cents, off 45 points; December 2026 closed 
at 68.05 cents, minus 31 points; and March 2027 finished at 69.35 cents, minus 
9 points. Tuesday's estimated volume was 86,075 contracts.

   Keith Brown can be reached at commodityconsults@gmail.com




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