DTN Morning Cotton Commentary          08/12 07:14

   Cotton Awaits Wednesday Data

   The cotton market is essentially flat ahead of today's data dump. 

Keith Brown
DTN Contributing Cotton Analyst

   The cotton market is essentially flat ahead of today's data dump. Initially, 
there will be CPI numbers, later followed by a supply-demand update. Of course, 
as always, traders are keen on the U.S./Iran situation with all its influences.

   China's State Reserve completed its 17th consecutive sold-out auction 
Wednesday for approximately 8,016 metric tons (about 35,270 bales). The 17-day 
total reached 136,298 mt (about 599,711 bales), consisting of roughly 51% U.S. 
cotton, 18% Brazilian, and 31% Xinjiang.

   The July Consumer Price Index (CPI) is due at 8:30 a.m. EDT Wednesday. 
Economists expect headline CPI to rise 0.1% from June and 3.4% from a year ago, 
with core CPI expected to increase 0.2% to 0.3% for the month and 2.5% 
annually. A hotter-than-expected report could reinforce expectations that the 
Federal Reserve will keep rates higher for longer, while a softer reading would 
strengthen the case for an eventual rate cut.

   At noon EDT Wednesday, USDA will issue its August Crop Report. For that 
WASDE update, the average trade expectation for U.S. 2026-27 production is 
13.54 million bales, down from the 13.70 million seen in the July update. 
Domestic exports are expected around 12.30 million bales, unchanged from July, 
likely resulting in carryout of 3.86 million bales versus the 4.10 reported in 
July. World production is expected to come in at 116.65 million bales, versus 
117.26 million in July. World ending stocks are expected at 71.10 million 
against July's 71.22 million.

   In addition, USDA's Farm Service Agency (FSA) will issue its crop acreage 
totals. This FSA acreage update reflects the "certified acres" which were due 
on July 15. Thus, its data may offer the market a better read on 
producer-reported planted acreage.

   Crude oil is trading nervously unchanged. The on-going U.S./Iran situation 
is replete with contradictions, misinformation, and threats. Thus, hopes are 
fading for a serious, acceptable deal. In the background, it's noted that U.S. 
oil stockpiles have fallen to their lowest level in more than four decades!

   Chart support for December cotton stands at 83.00 cents and 82.05 cents, 
with resistance around 85.00 cents and 85.50 cents. Wednesday morning's 
estimated volume is 7,682 contracts.

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




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