DTN Closing Cotton            09/11 13:41

   Cotton Prices Tumble on Bearish World Supply Data and CPI Pressure

   Despite USDA's September WASDE being seen as neutral/friendly, the cotton 
market closed triple-digit lower Friday.

Keith Brown
DTN Contributing Cotton Analyst

   Despite USDA's September WASDE being seen as neutral/friendly, the cotton 
market closed triple-digit lower Friday. Negative outside Chicago Grains added 
to the tone, while crude oil's return up and over the $100 mark was seen as 
detrimental. 

   Specifically, today's cotton report was bullish against expectations for the 
US outlook, but the world numbers leaned bearish. Domestic production was 
lowered pretty much as expected, while exports were left unchanged instead of 
being lowered. This math caused ending stocks to show a bigger decline than 
expected. The fact that USDA left exports unchanged may leave some traders 
expecting downward revisions in exports in future reports. The world numbers 
leaned bearish, with production and ending stocks coming above expectations. 

   This morning, the CPI (consumer price index) showed a seasonally adjusted 
increase of 0.4% for the month, putting the 12-month increase at 3.4%. Both 
readings were essentially in line with traders' expectations. However, 
stripping out volatile food and energy prices, core CPI posted a 0.3% monthly 
gain, or 0.1 percentage point higher than forecast. The core annual rate came 
in at 2.4%, in line with the estimate.

   This afternoon at 3:30 p.m. EDT, the CFTC will update its Commitment of 
Traders numbers. The last report held the managed-money funds as net buyers of 
12,000 positions. Their buying action swelled the overall net-long carry to 
107,936 contracts. Their record carry was 108,788 contracts. 

   For Friday, December cotton closed at 86.06 cents, down 2.16 cents; March 
2027 finished at 88.56 cents, off 2.10 cents, and July 2027 settled at 89.52 
cents, down 1.91 cents. Today's estimated volume was 66,499 contracts.

   Keith Brown can be reached at commodityconsults@gmail.com




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