DTN Morning Cotton Commentary          09/17 07:45

   Cotton Keeps Struggling 

   Cotton remains under pressure despite oversold conditions, as weak exports, 
higher rates, bearish fund positioning and lower crude prices limit recovery 
prospects.

Keith Brown
DTN Contributing Cotton Analyst

   Although the cotton market is somewhat "technically oversold" after its 
thousand-point drop from the August high (9345), it still cannot muster up any 
sort of recovery rally. Likely, with overloaded bullish funds, plus being on 
the eve of harvest, the market might be sensing more downside action is likely. 
The increase in interest rates yesterday didn't help the cotton industry either.

   In a move that markets widely anticipated, the central bank's Federal Open 
Market Committee voted 12-0 to increase its key interest rate by a quarter 
percentage point, or 25 basis points. The move brought the overnight funds rate 
to a target range of 3.75%-4%.

   USDA just released new export-sales data with the following numbers: Net 
sales of Upland totaling 71,200 RB for 2026/2027 were down 4 percent from the 
previous week and 30 percent from the prior 4-week average. Increases were 
primarily for Vietnam (28,200 RB, including 600 RB switched from Indonesia and 
decreases of 1,800 RB), Guatemala (14,000 RB), Pakistan (7,500 RB), Honduras 
(6,500 RB, including 200 RB switched from Guatemala and decreases of 700 RB), 
and Thailand (4,400 RB). Net sales of 6,200 RB for 2027/2028 were primarily for 
Guatemala (5,600 RB). Exports of 142,100 RB were down 20 percent from the 
previous week and 26 percent from the prior 4-week average. The destinations 
were primarily to Vietnam (44,600 RB), Pakistan (24,700 RB), India (18,000 RB), 
Bangladesh (16,200 RB), and Mexico (9,900 RB). Net sales of Pima totaling 8,300 
RB for 2026/2027 were down 17 percent from the previous week, but up 68 percent 
from the prior 4-week average. Increases reported for India (3,400 RB), 
Bangladesh (2,200 RB), Thailand (1,700 RB, including 200 RB switched from 
Italy), Peru (700 RB), and Pakistan (500 RB), were offset by reductions for 
Italy (200 RB). Exports of 4,100 RB were down 22 percent from the previous week 
and 36 percent from the prior 4-week average. The destinations were to India 
(2,900 RB), Peru (500 RB), Turkey (400 RB), Thailand (200 RB), and Colombia 
(100 RB).

   At 3:30p.m. EST Friday, the CFTC will update its closely watched Commitments 
of Traders Report. Last week's data showed managed money traders were net 
sellers of 7,807 contracts, which reduced their net long carry to 100,170. 
Their record stands at 108,788 contracts.

   Crude Oil is lower again today as Saudi Arabia is making additional supplies 
available to Asian refiners through ship-to-ship transfers near Oman's Sohar 
port. That move, in addition to the quick repairs being made to her East-West 
pipeline, is elping ease prices.

   October Cotton Contract will enter delivery on Sept. 24. Its current open 
interest stands at 88 contracts.  

   The close-in support for December Cotton stands at 8300  and 8260 Thursday 
with resistance around 8500 and 8660. This morning's estimated volume is 24,028 
contracts.

    

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




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