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DTN Morning Cotton Commentary 09/16 07:13
Cotton Market Awaits Fed Decision Wednesday
After attempting to post a counter-Tuesday trade yesterday, the cotton
market is seeing little upside follow-through today.
Keith Brown
DTN Contributing Cotton Analyst
After attempting to post a counter-Tuesday trade yesterday, the cotton
market is seeing little upside follow-through today. Traders are anxiously
monitoring the U.S.-Iran conflict, today's Fed announcement, and are preparing
for the enviable harvest season.
Today at 2 p.m. EDT, the Federal Reserve will announce its latest monetary
policy decision. The "smart money" is betting on a quarter-point increase in
the Fed Funds rate. In fact, using the CME FedWatch tool, there is a 90% chance
for a hike on Wednesday.
Crude Oil is lower today, as a weekly report on U.S. inventories revealed an
increase in supply. Nonetheless, worries remain over escalating U.S.-Iran
tensions. Recent strikes by the Houthis on a Saudi pipeline have paralyzed the
only alternate flow of Middle Eastern Oil beyond the Strait of Hormuz.
Tomorrow at 8:30 a.m. EDT, USDA will release fresh exports-sales data. Last
week's report showed combined seasonal sales of 76,318 bales. That amount was
up from 27,525 bales sold in the previous week. Currently, cumulative sales
have reached 38% of the USDA's current marketing year forecast versus a
five-year average of 47% at this juncture of the season.
On Friday, the CFTC will update its closely watched Commitments of Traders
Report. Last week's data showed managed money traders were net sellers of 7,807
contracts, which reduced their net long carry to 100,170. Their record stands
at 108,788 contracts.
The October Cotton Contract will enter delivery on Sept. 24. Its current
open interest stands at 137 contracts.
For Wednesday, close-in support for December Cotton stands at 83.50 and
83.00 cents, with resistance around 85.75 and 86.15 cents. This morning's
estimated volume is 7,028 contracts.
Keith Brown can be reached at commodityconsults@gmail.com or by calling
(229) 890-7780.
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