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DTN Morning Cotton Commentary 07/27 07:16
Cotton Unchanged, All Else Crumbles
In the face of a massive Monday sell-off in the energies and the grains, the
cotton market is resiliently unchanged.
Keith Brown
DTN Contributing Cotton Analyst
In the face of a massive Monday sell-off in the energies and the grains, the
cotton market is resiliently unchanged. Cotton's technicals still carry a
positive bent, while the funds added to their long carry last week. Traders
will obviously keep one "trading eye" on the crude oil -- that is the Middle
East -- with the other on news from the Fed or some other cotton specific
report.
Crude oil is getting crushed after Iran reportedly said it would suspend
various attacks on Hormuz and other locales, as long as the U.S. pauses its
hostilities. There are reports China is attempting to help initiate peace talks
in Pakistan between the belligerents.
Last Friday the CFTC updated its Commitments of Traders data. The results
showed managed-money funds bought some 3,500 futures, further swelling their
net-long position to 53,209 contracts.
Monday at 4 p.m. EDT, USDA will issue fresh crop condition numbers. Of late,
the good-to-excellent readings have been moving two-sided. The highest reading
was 54%, followed by a couple of weeks of 44% good to excellent, but Monday
past was 45%.
Tuesday, the Federal Reserve meets to discuss U.S. interest rates and will
announce its intentions at 2 p.m. EDT Wednesday. Currently, there is a 66%
chance the central bank will not do anything. However, some governors would
like to hike rates immediately.
The 6- to 10-day weather forecast (Aug 1-Aug 5) shows much above-normal
temperatures for Texas, while the Delta should experience only above-normal
readings. The Southeast returns to a normal range. Rain-wise, Texas looks to
have normal chances, while the Southeast should have slightly above-normal
odds.
Chart support for December cotton stands at 79.45 cents and 78.75 cents,
with resistance around 81.00 cents and 82.00 cents. This morning's estimated
volume is 7,878 contracts.
Keith Brown can be reached at commodityconsults@gmail.com or by calling
(229) 890-7780.
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