DTN Morning Cotton Commentary          08/21 07:16

   Is Cotton Consolidating?

   The cotton market is attempting to gather its gains Friday morning after 
unfolding a pretty strong week. 

Keith Brown
DTN Contributing Cotton Analyst

   The cotton market is attempting to gather its gains Friday morning after 
unfolding a pretty strong week. As of this morning, December cotton has gained 
some 400 points. The ICE futures posted two consecutive contract highs and 
seemed to be anticipating more upside. At the heart of the run are adverse 
growing conditions, such as those in Texas, a weaker U.S. dollar, and seemingly 
improving demand.

   China's State Reserve had its 24th consecutive sold out auction, and 
Friday's sales were 8,032 metric tons (mt) (about 35,341 bales). The 24-day 
total reached 192,497 mt (about 846,987 bales), consisting of roughly 46% U.S. 
cotton, 22% Brazilian, and 32% Xinjiang.

   Friday afternoon at 3:30 p.m. CDT, the CFTC will update its Commitments of 
Traders numbers. Last week saw the managed-money funds net buy 10,500 
positions, swelling their net-long carry to 72,870 contracts.

   The U.S. dollar is lower Friday as investors question whether the U.S. 
Treasury's efforts to calm the bond markets might pressure the Greenback. 
Treasury Secretary Scott Bessent said on Thursday he may increase the 
government's repurchases of Treasuries further, a day after the department 
surprised markets with a pledge to double the size of buybacks of longer-dated 
debt to rein in bond yields.

   Crude prices are slightly lower Friday, but are still set for a second week 
of gains as the U.S. vows to mount the "toughest sanctions in history" against 
Iran. Treasury Secretary Scott Bessent told a certain business channel that a 
return to large-scale military combat was unlikely, but additional economic 
sanctions on Iran will be enacted. 

   Chart support for December cotton stands at 87.50 cents and 86.45 cents, 
with resistance around 88.75 cents and 90.00 cents. Friday morning's estimated 
volume is 10,793 contracts.

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




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