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After a strong run through August, cotton hit the reset button last week. December futures settled at 86.33 cents per pound, down more than five cents on the week after reaching a new contract high of 93.74 cents on Monday.
AI-assisted narration and summarization based on original reporting and data from PCCA.
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Welcome to Cotton Quick Take by PCCA, your short weekly update on the factors shaping cotton markets and the broader agricultural economy. Thanks for joining us. Let's take a quick look at what's moving the market this week. After a strong run through August, cotton hit the reset button last week. December futures settled at 86.33 cents per pound, down more than 5 cents on the week after reaching a new contract high of 93.74 cents on Monday. Despite the sharp pullback, the underlying cotton story hasn't changed much. The move appears to be more of a correction after prices climbed quickly rather than a major shift in market fundamentals. Corey Smith, PCCA's Director of Risk Management, says hopefully demand is on the rise.
SPEAKER_01
As the market increased through August, the pressure was really felt by the basis as most mills stepped aside. As the market adjusts, remember that the fundamental story hasn't changed much, as we are now looking at 100% of Oklahoma, 100% of Kansas, and 86% of Texas experiencing some level of drought, and almost 60% across the entire U.S.
SPEAKER_02
Weather and crop conditions are still a concern as the U.S. crop moves closer to harvest. Late season heat and dryness across the Southwest have shifted more of the focus toward yield and abandonment, especially in West Texas. With the crop nearing the finish line, the question now is how much of the late season stress ultimately shows up in production.
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SPEAKER_02
Demand will also be important to watch. Upland export sales fell sharply last week, but total commitments remain ahead of last year. With futures moving from the 90s back into the mid-80s, upcoming reports should provide a better indication of whether buyers were simply waiting for more attractive prices. Looking ahead, Friday's USDA supply and demand report will be the week's biggest cotton-specific event. Traders will be watching closely for changes to U.S. production following another difficult month in the Southwest. Inflation data is also on deck with Thursday's PPI and Friday's CPI reports potentially influencing the dollar ahead of next week's Federal Reserve meeting. Thanks for listening to Cotton Quick Take by PCCA. Be sure to join us next week for another quick update on the markets and the stories shaping the cotton industry.
