DTN Closing Cotton            09/14 13:38

   Cotton Still On "Defense"

   Cotton market extends losses amid Fed rate hike and weak crop ratings.

Keith Brown
DTN Contributing Cotton Analyst

   After falling two hundred points last Friday, today the cotton market 
extended its losses. Likely, the massive net-long fund position is tilting 
towards liquidation. Traders remain conflicted over the Middle East, the 
Federal Reserve potential rate hike, and emerging seasonality pressure.  

   This afternoon at 4p.m., USDA will grade the 2026 Crop. Last week, the crop 
was rated at 34% good/excellent compared to the previous rating of 38%. Last 
year, the ratings were 55% good/excellent.

   The Federal Reserve will meet tomorrow and Wednesday to discuss domestic 
interest rates. Recent jobs data and inflation reports, plus high-flying crude 
oil, has some traders expecting a quarter-point hike in rates. According to the 
CME Marketwatch tool, there is a ninety-percent chance for a hike on Wednesday.

   Last Friday's export sales report showed net combined seasonal sales of 
76,318 bales. That amount was up from 27,525 the previous week, but still the 
second lowest since July 9. Cumulative sales have reached 38% of USDA's 
forecast for the current marketing year versus a five-year average of 47%.

   The latest China's State Reserve auction was not a sell-out, as were the 39 
prior auctions. Today's inventory involved 8,003 tonnes (about 35,213 bales) 
offered, but only 7,744 tonnes (about 34,073 bales) were purchased. Still, it 
was a 97% purchase rate. Supposedly, the sales were a mix of one-half US Cotton 
with the balance between Brazilian and Xinjiang cotton.

   For today, December closed at 8455, minus 151 points, March 2027 finished at 
8712 off 144 points, and July 2027 settled at 8807, down 145 points higher. 
Today's estimated volume was 64,121 contracts.

   Keith Brown can be reached at commodityconsults@gmail.com




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