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DTN Morning Cotton Commentary 10/15 08:02
Cotton Rebounds, Oversold
The cotton market is slightly higher with a version of Turnaround Tuesday
playing out.
By Keith Brown
DTN Cotton Correspondent
The cotton market is slightly higher with a version of Turnaround Tuesday
playing out. That is, from last Friday's session to Sunday night's trade, the
market rallied sharply higher on news of a partial trade deal. Yet, when China
backed off, indicating she wanted more face-to-face talks, the table turned on
the market, and down it came. In fact, Monday's range spanned from a high of
65.85 cents down to a 62.19 cents low. Prices are slowly lifting their heads
Tuesday.
USDA will publish its crop harvest data Tuesday afternoon due to Columbus
Day. Last week, the 2019 crop was 25% harvested, which was mathematically the
normal pace of gathering.
Because of Columbus Day, USDA's weekly sales and exports are delayed until
Friday. Last week saw better sales, but the future twist the trade is hoping to
see from China is no more cancellations of her previous purchases. Such could
signal a good faith effort towards resolving the U.S.-China trade dispute.
There was a sizable jump in open interest in recent sessions which may been
seen as positive turn. However, fundamentally, traders know the 7.0 million
bale carryout represents a 12-year high, and accordingly, the desire to rally
may be weighed down until the long-suffering U.S.-China trade war is resolved.
The most recent Commitments of Traders data has speculators net short 19,300
contracts. This position is a far cry from their 49,000 net short position of
mid-summer. Last week the data suggested speculators "retired" some 5,500
contracts.
Support for December cotton lies at 61.25 cents and 60.10 cents, with
resistance at 64.20 cents. Overnight estimated volume stands at 9,605
contracts.
Keith Brown can be reached at commodityconsults@gmail.com or by calling
(229) 890-7780.
(BE)
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