DTN Morning Cotton Commentary          08/19 07:20

   Cotton Regains Upside as Crop Concerns Persist

   After sloughing off a bearish counter-Tuesday, the cotton market is right 
back at negotiating the upside.

Keith Brown
DTN Contributing Cotton Analyst

   After sloughing off a bearish counter-Tuesday, the cotton market is right 
back at negotiating the upside. Traders remain concerned that the U.S. crop is 
worsening, as evidenced by the latest crop condition data. Moreover, there 
remains an international wariness with given production in India and China. 
Thursday, traders will see fresh exports numbers, followed on Friday with the 
CFTC update.

   Thursday, at 8:30 a.m. EDT, USDA will issue its weekly export sales. 
Previously, sales were 126,000 bales, while shipments were 146,000 bales. Both 
categories were below expectations.

   On Friday afternoon, the CFTC will update its Commitment of Traders numbers. 
Last week saw the managed-money funds net buy 10,500 positions, swelling their 
net-long carry to 72,870 contracts.

   China's State Reserve had its 22nd consecutive sold out auction today for 
8,051 tonnes (about 35,424 bales). The 22-day total reached 176,407 tonnes 
(about 776,191 bales), consisting of roughly 46% U.S. cotton, 22% Brazilian and 
32% Xinjiang. The inference of these sales is that space is being freed for new 
and additional purchases by China, or even U.S. cotton.

   Crude oil is knocking on a three-week high Wednesday as uncertainty over 
shipping through the Strait of Hormuz and ongoing supply disruptions remain 
paramount. The Strait of Hormuz was carrying about one-fifth of global oil 
and liquefied natural gas supplies before the U.S.-Israeli war on Iran began 
at the end of February.

   Chart support for December cotton stands at 84.75 cents and 84.00 cents, 
with resistance around 86.75 cents and 87.50 cents. Wednesday morning's 
estimated volume is 16,986 contracts.

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




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