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DTN Morning Cotton Commentary          10/23 08:16

   Cotton Lower in Two-Sided Action 

   The cotton market is slightly lower Friday as some speculators are talking 
profits while some producers are hedging their crop.

Keith Brown
DTN Contributing Cotton Analyst

   The cotton market is slightly lower Friday as some speculators are talking 
profits while some producers are hedging their crop. Thus far, December cotton 
has enjoyed a strong up week, within a strong up month, crowned by the fact the 
market went positive on the year just this week.

   Friday afternoon, the CFTC will issue another Commitment of Traders report, 
detailing the trading structure of the market. In its last data, the regulator 
showed certain money-managed speculators net-long nearly 60,000 contracts. That 
amount represents the equivalent of 6 million bales of cotton. Obviously, 
speculators cannot be that heavily long without taking the market to an 
overbought status.

   Thursday night, the last presidential debate occurred, with President Trump 
the only candidate mentioning and praising the U.S. farmer. That notation has 
to be worth something. The administration and the House Speaker are trying to 
work out a new stimulus deal but remain far apart on several key issues. The 
most glaring is the Democrats want money to spend on things not directly 
related to COVID-19.

   Cumulative sales for the current marketing year have reached 63% of USDA's 
original target. The five-year average is 53%. Numerically, sales currently 
stand at 8.46 million bales versus 9.10 million for this time last year. The 
largest buyer of U.S. cotton in this week's exports sales was Pakistan, 
supposedly the world's fourth largest producer. That news should speak volumes 
to the trade.

   Weather wise, the six- to 10-day forecast calls for above normal rainfall 
for the U.S. Delta and the Southeast. That will raise concerns over the pace of 
harvest and declining grades. On Monday, USDA will update those aspects of the 
cotton market. 

   The U.S. harvest continues and will be updated Monday afternoon by USDA. 
Currently, the 1- to 5-day outlook shows moderate rainfall across the Delta and 
the Southeast. The six-to-10 day simply calls for above average precipitation, 
while the eight-to-14 day promotes a drier situation. As of last Monday, the 
U.S. crop harvest was 34% complete.

   For Friday, support for December cotton stands at 71.25 cents and 70 cents, 
with resistance at 72.20 cents and 73.00 cents. Overnight estimated volume is 
6,191 contracts.

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

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