DTN Morning Cotton Commentary          02/02 07:22

   Cotton Suffers With Other Markets Monday

   The cotton market is starting the new month lower, as are most other 
markets. 

Keith Brown
DTN Contributing Cotton Analyst

   The cotton market is starting the new month lower, as are most other 
markets. Friday's massive meltdown in the precious metals has many participants 
somewhat gun-shy. In fact, spot March posted a new contract low. With the 
unfolding new month, cotton traders will be assessing the forthcoming 
influences of options expiration, a supply-demand update, and spot delivery, 
and private acres forecasts. 

   On Friday, President Trump nominated Kevin Warsh to head the Federal Reserve 
this May. Warsh has previously served as a Fed governor and supposedly is more 
of a hawk on monetary policy. His nomination somewhat resulted in the sharp 
decline of the precious metals, and the U.S. dollar strengthening.

   Last Friday, the CFTC issued its weekly Commitments of Traders report. The 
release showed managed-money funds had net sold some 13,000 positions, 
increasing their net-short carry to 65,029 contracts. Interestingly, cotton's 
open interest has swelled to a record high 360,000 positions.

   The U.S. government is partially shut down over DHS funding. The House has 
yet to vote. Leaders hope to resolve their differences Monday and vote to 
reopen the government by Tuesday.   

   March options will expire on Feb. 6 -- this Friday. Traders will be 
anticipating what amount of puts and calls may expire in-the-money.

   The latest drought information shows the U.S. cotton planted area at 80% 
drought (varying stages) down from the peak reading of 83%. The recent winter 
storm, Fern, may have improved soil conditions in some areas, but still it is a 
tall number to overcome.  

   Chart support for March cotton stands at 62.00 cents and 61.50 cents, with 
resistance hovering about 63.50 cents and 64.20 cents. Monday morning's 
estimated volume is 26,902 contracts.

   Keith Brown can be reached at commodityconsults@gmail.com or by calling 
(229) 890-7780.




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