DTN Closing Cotton            02/06 13:33

   Cotton Erodes Lower

   The cotton market was weighed down today by the March options expiration, as 
well as the impending delivery for the same. 

Keith Brown
DTN Contributing Cotton Analyst

   The cotton market was weighed down today by the March options expiration, as 
well as the impending delivery for the same. Growers holding real cotton are 
faced with either rolling those positions forward in time. Cotton posted new 
contract lows even in the face of a record 50,000 Dow Jones.

   March options expired today at the close. Current open interest for Spot 
March is around 155,000 contracts, and it will be interesting to see what 
effect expiration has on the record open interest of 380,000 contracts. In 
addition, traders and hedgers must vacate the spot contract the preceding 
Friday, Feb. 20, to avoid the notice process.

   Also, today at 3:30 p.m. EST, the CFTC will update its Commitment of Traders 
report. Its last release showed that the managed-money funds had net sold some 
13,000 contracts, increasing their overall bearish position to 65,000-plus.

   Next Tuesday, USDA will issue its February supply-demand update. There is a 
possibility the government tabulators will increase domestic ending stocks. 
Then on Thursday, Feb. 12, the NCC will release its 2026 acres membership 
survey.

   Also, next week, the NCC will meet and release its 2026 acres survey on Feb. 
12. Although not an official government report, nonetheless, it will be the 
first fundamental look at the potential for 2026.

   Finally next week, traders will see the delayed U.S. payrolls report for 
January. Some analysts suggest that the U.S. labor market is losing some 
momentum and traders are now pricing in a higher chance that interest rates 
will be cut within the first half of this year, rather than in the second. If 
there is a major downward revision to payrolls, it would add pressure to the 
Federal Reserve to eventually cut rates.

   For Friday, March 2026 went out at 61.06 cents, 70 points lower; July was 
64.83 cents, down 43 points; and December 2026 closed at 67.60 cents, minus 40 
points. Friday's estimated volume was 138,526 contracts.

   Keith Brown can be reached at commodityconsults@gmail.com




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