DTN Morning Cotton Commentary          08/27 07:46

   Cotton Hits Fresh Contact Highs as Traders Eye Emerging Demand

   Against the high-flying Chicago grains and approaching end of the month, the 
cotton market has posted fresh contract highs Thursday morning.

Keith Brown
DTN Contributing Cotton Analyst

   Against the high-flying Chicago grains and approaching end of the month, the 
cotton market has posted fresh contract highs Thursday morning. Traders have 
been dialing in much of the supply-driven fundamentals of adverse weather and 
yields, but are beginning to believe that a new level of demand may be emerging.

   USDA just issued its weekly export sales data with the following numbers:

   "Net sales of Upland totaling 95,700 RB for 2026/2027 primarily for Vietnam 
(19,000 RB, including 400 RB switched from Indonesia), Guatemala (14,400 RB), 
Bangladesh (14,000 RB), Peru (13,900 RB), and India (13,800 RB), were offset by 
reductions for Hong Kong (1,600 RB) and Turkey (700 RB). Net sales of 39,600 RB 
for 2027/2028 were reported for Malaysia (30,800 RB) and Guatemala (8,800 RB). 
Exports of 181,000 RB were primarily to Vietnam (47,900 RB), Pakistan (35,300 
RB), India (18,800 RB), Turkey (15,000 RB), and Mexico (11,600 RB). Net sales 
of Pima totaling 2,100 RB for 2026/2027 were for India (1,100 RB, including 
decreases of 400 RB), Turkey (400 RB), Bangladesh (400 RB), Japan (100 RB), and 
Pakistan (100 RB). Exports of 8,600 RB were primarily to India (4,300 RB), 
Bangladesh (1,300 RB), Egypt (1,100 RB), Peru (900 RB), and Vietnam (900 RB)."

   Friday at 3:30 p.m. EDT, the CFTC will update its Commitment of Traders 
numbers. Last report showed that the managed-money funds net bought some 5,800 
positions, making their net-long carry to 78,668 contracts.

   The U.S. dollar is recovering from some of last week's losses Thursday. 
Investors are awaiting signals from the Federal Reserve as to its next move 
regarding monetary policy. The Fed is currently at its annual Jackson Hole 
symposium. Recent data showed that inflation remained stickier than economists 
had anticipated. The PCE Index indicated that inflation rose more than expected 
in July, while another report stated that the economy grew 1.5% in the second 
quarter.

   China's State Reserve had its 28th consecutive sold-out auction, and 
Thursday's sales were 8,035 tonnes (about 35,354 bales). The 28-day total 
reached 224,615 tonnes (about 988,306 bales), consisting of roughly 46% U.S. 
cotton, 22% Brazilian and 32% Xinjiang.

   The 6- to 10-day weather forecast (Sept. 1-5) shows much above-normal 
temperatures for the U.S. Cotton Belt. Rain wise, the Belt is likely to see 
normal chances for precipitation. Some analysts worry that a weather pattern 
shift, a result of El Nino, may eventually produce a cold, wet harvest period.

   For Thursday, support for December cotton lies at 87.80 cents and 87.00 
cents, with resistance around 89.50 cents and 90.00 cents. Thursday morning's 
estimated volume is 9,432 contracts.

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




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