DTN Morning Cotton Commentary          08/26 07:18

   Cotton Moving Lower

   The cotton market continues to consolidate its recent gains in a 
tightly-woven pattern. 

Keith Brown
DTN Contributing Cotton Analyst

   The cotton market continues to consolidate its recent gains in a 
tightly-woven pattern. Clearly, the market is wanting/needing some sort of 
internal or external catalyst to activate prices higher or spill them lower. 
With that, there are several imminent reports due this week, along with 
end-of-the-month squaring to assess.  

   China's State Reserve had its 27th consecutive sold-out auction, and 
Wednesday's sales were 8,035 metric tons (mt) (about 35,354 bales). The 27-day 
total reached 216,580 mt (about 952,952 bales), consisting of roughly 46% U.S. 
cotton, 22% Brazilian, and 32% Xinjiang.

   Wednesday at 8:30 a.m. EDT, the PCE (personal consumption expenditures) 
Index will be released. It represents a compilation of monthly (July) changes 
in prices of goods and services and is considered the Federal Reserve's 
preferred metric of reading inflation. Estimates call for a month-over-month 
increase of 0.1% and a year-over-year increase of 3.6%. The June data showed a 
decrease of 0.1% on a monthly basis and a 3.7% increase on an annual basis.

   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.

   This Friday the CFTC will update its Commitments of Traders numbers. Last 
report showed that the managed-money funds net bought some 5800 positions, 
augmenting their net-long carry to 78,668 contracts.

   Crude oil extended its drift lower as the market traded under $80 overnight. 
There are easing concerns about military conflict in the Gulf and traders 
mulled prospects for an Iran-Oman deal to secure a safe transit route through 
the Strait of Hormuz. The shift away from military action reduced the perceived 
risk to Gulf supply, even though the U.S. has not ruled out other military 
interventions.

   For Wednesday, support for December cotton lies at 87.00 cents and 86.25 
cents, with resistance around 89.50 cents and 90.00 cents. Wednesday morning's 
estimated volume is 7,387 contracts.

    

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




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