DTN Morning Cotton Commentary          08/25 07:22

   Cotton Sees Tuesday Turndown

   The cotton market is materially lower Tuesday morning as it is attempting to 
work off the overbought technical condition. 

Keith Brown
DTN Contributing Cotton Analyst

   The cotton market is materially lower Tuesday morning as it is attempting to 
work off the overbought technical condition. In addition, the market senses 
there are a great deal of producer fixation orders resting and being triggered 
above the 89.00 cent level.

   Monday afternoon, USDA updated its crop progress data. The report held that 
37% of the U.S. cotton crop was rated good to excellent as of Aug. 23. That 
number was down from 38% from the previous week, 54% a year ago, and is below 
the five-year average for this date of 46%. Texas was 19% G/E, down from 21% 
last week, 46% a year ago, and the five-year average of 33%. Mississippi went 
from 45% good to excellent last week to 53% this week and is almost approaching 
the five-year average of 56%.

   Cotton's overbought status is better understood by examining the open 
interest flow. Last Friday saw open interest posting its 16th consecutive 
increase. Monday's session commenced with 371,091 total contracts, the seventh 
highest open interest in cotton's entire history. The six higher readings 
surrounded the all-time high of 386,418 contracts made on Feb. 4, 2026.

   China's State Reserve had its 26th consecutive sold-out auction, and 
Tuesday's sales were 8,003 metric tons (mt) (about 35,213 bales). The 26-day 
total reached 208,545 mt (about 917,598 bales), consisting of roughly 47% U.S. 
cotton, 21% Brazilian, and 32% Xinjiang.

   This Thursday at 8:30 a.m. EDT, USDA will issue its weekly export sales 
data. Last week saw combined seasonal sales of 275,000 sales, with shipments of 
222,000 bales. 

   Crude oil continues to erode Tuesday. WTI oil is triple-digits lower as it 
nears the $8,200 mark. It is reported that ship traffic in the Hormuz Strait is 
on the rise. 

   For Tuesday, support for December cotton lies at 86.90 cents and 86.10 
cents, with resistance around 89.40 cents and 90.00 cents. Tuesday morning's 
estimated volume is 11,905 contracts.

    

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




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