DTN Morning Cotton Commentary          08/20 07:51

   Cotton Taps The Brakes 

   After posting life-of-contract highs Wednesday, the cotton market is easing 
back lower Thursday morning. 

Keith Brown
DTN Contributing Cotton Analyst

   After posting life-of-contract highs Wednesday, the cotton market is easing 
back lower Thursday morning. Apparently, there are some bullish but 
not-so-obvious underpinnings driving the run, which makes the situation 
all-the-more friendly. Traders will now assess exports, Friday's CFTC update, 
and then whatever geopolitical news the weekend might bring.

   China's State Reserve auctions, started July 20, are being seen as a bullish 
contributor. Thursday was the 23rd consecutive sold-out auction, with the 
following results. The sales were about 35,455 bales, roughly swelling the 
total to 811,646 bales. The breakdown consisted of roughly 47% U.S. cotton, 21% 
Brazilian, and 32% Xinjiang.

   USDA just released its weekly export sales with the following numbers: "Net 
sales of Upland totaling 209,400 RB for 2026/2027 primarily for Vietnam (55,400 
RB, including 2,700 RB switched from Indonesia and decreases of 700 RB), 
Pakistan (51,900 RB), El Salvador (40,100 RB), Honduras (27,600 RB), and India 
(16,500 RB, including 900 RB switched from Bangladesh), were offset by 
reductions for China (4,800 RB), Mexico (4,000 RB), Turkey (1,200 RB), and Hong 
Kong (600 RB). Net sales of 64,900 RB for 2027/2028 were reported for El 
Salvador (35,100 RB), Guatemala (15,400 RB), and Honduras (14,300 RB). Exports 
of 222,000 RB were primarily to Vietnam (66,800 RB), Pakistan (30,200 RB), 
India (28,200 RB), Bangladesh (22,400 RB), and Turkey (21,500 RB). Net sales of 
Pima totaling 5,900 RB for 2026/2027 primarily for India (3,000 RB, including 
decreases of 1,000 RB), Vietnam (1,800 RB), Djibouti (600 RB switched from Hong 
Kong), Peru (500 RB), and Thailand (400 RB), were offset by reductions for Hong 
Kong (600 RB) and Mexico (100 RB). Exports of 6,900 RB were primarily to India 
(2,700 RB), Pakistan (2,400 RB), Turkey (600 RB), Djibouti (600 RB), and 
Bangladesh (200 RB)."

   On Friday afternoon at 3:30 p.m. EDT, the CFTC will update its Commitments 
of Traders numbers. Last week saw managed-money funds net buy 10,500 positions, 
swelling their net-long carry to 72,870 contracts.

   The 6- to 10-day weather forecast (Aug. 25-Aug. 29) shows much-above normal 
temperatures for the U.S. Cotton Belt, with Texas staring at very much-above 
normal readings. Rain-wise, West Texas looks to be below-normal, while the 
Delta and the Southeast will likely experience normal chances.

   Chart support for December cotton stands at 86.25 cents and 85.60 cents, 
with resistance around 88.75 cents and 89.10 cents. Thursday morning's 
estimated volume is 17,208 contracts.

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




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