DTN Morning Cotton Commentary          10/28 07:27

   Cotton Market Eyes Fed Decision 

   Cotton edges higher as traders await Fed, inflation, exports data.



Keith Brown
DTN Contributing Cotton Analyst

   The cotton market is slightly higher Wednesday trying to apply its technical 
brakes. Lately, the market has been on a bearish spill, in which it closed 
below the all-important (to some people) 200-day moving average.  Traders are 
keen on Wednesday's Fed meeting, the situation in Brazil, and the latter week 
reports due Thursday and Friday.  

   The Federal Reserve will announce its policy on interest rates at 2 p.m. EDT 
Wednesday. Despite the presence of higher concentrations of inflation most 
analysts feel that the central bank will wait till December to hike rates. 

   To reiterate, starting this December, the CFTC will initiate a twice-weekly 
release of its highly watched Commitment of Traders (COT) Report. The 
transition aims to significantly trim the time lag between data collection and 
public reporting. This move is obviously different to the traditional Tuesday 
data collected and released the following Friday at 3:30 p.m. EDT.

   The USDA will issue fresh export-sales Thursday. Highlights from that report 
revealed total seasonal sales of 199,630 bales, higher than the 154,074 bale 
number of the previous week. Cumulative sales had reached 47% of USDA's 
forecast versus a five-year average of 55%.  

   Also, on Thursday the September Personal Consumption Expenditures (PCE) 
inflation report will be released by the Bureau of Economic Analysis. 
Supposedly, this report is a favorite tool of the Federal Reserve for gauging 
inflation.  Expectations include the headline PCE which is forecasted to rise 
0.5% month-over-month (up from 0.3% in August) and 3.6% to 3.7% year-over-year 
(up from 3.4% in August). The Core PCE (strips out volatile food and energy): 
Forecasted to increase 0.3% month-over-month and rise to 3.1% year-over-year 
(up from 3.0% in August).

   For Wednesday, close-in support for December Cotton stands at 77.50 cents 
and 77.00 cents, with resistance around 79.60 cents and 80.10 cents. The 
estimated volume is 9,279 contracts as of Wednesday morning.

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




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